April 2000 Volume 81 Number 4 "serving the protectors"
Police Super Update
By Michael Hogg

Superannuation Surcharge

he superannuation surcharge is a tax on the amount of employer superannuation contributions made by employers on behalf of members of superannuation schemes, including the police schemes, which are Constitutionally Protected Schemes (schemes are not liable for tax). The surcharge tax was introduced by the Commonwealth Government to apply from 20 August 1996.

The surcharge is only payable by high income earners whose “adjusted taxable income” exceeds the thresholds set down for each financial year. Adjusted taxable income is a member’s taxable income (as per your tax return), plus the surchargeable employer superannuation contributions applicable for each financial year.

From the 1999/2000 financial year, adjustable taxable income will also include reportable fringe benefits.

For example, the adjusted taxable income thresholds for the 1998/99 financial year were $75,856 and $92,111. If your adjusted taxable income for 1998/99 was less than $75,856 no surcharge is payable. If your adjusted taxable income was greater than $75,856 then the surcharge is 1% for each $1,084 of adjusted taxable income in excess of $75,856, rising to a maximum of 15% if your adjusted taxable income was $92,111 or over. The adjusted taxable income thresholds are indexed annually to Average Weekly Ordinary Time Earnings ($70,000 and $85,000 for 1996/97, $73,220 and $88,910 for 1997/98, will be $78,208 and $94,966 for 1999/2000).

Example

Superannuation Salary	$68,308
Employer Contribution	$12,295
Taxable Income	$68,308
Adjusted Taxable Income	$80,603 ($68,308 + $12,295)
Surcharge Percentage	4.38% ($80,603 - $75,856)/1,084
Surcharge Payable	$538.52 ($12,295 X 4.38%)

The Australian Taxation Office (ATO) is responsible for the recording and collection of the surcharge. The ATO has been advised of your surchargeable employer contributions for the 1996/97, 1997/98 and 1998/99 financial years.

If you are liable for the surcharge tax the ATO will issue an assessment notice to you advising the amount of surcharge tax payable. Upon receiving an assessment notice from the ATO you will have the option to pay the amount of surcharge tax or you can elect to defer payment of the tax until you receive a superannuation benefit from the Police Superannuation Scheme. Where the surcharge debt is deferred, the ATO will maintain a surcharge debt account which will accrue interest based on the Commonwealth Treasury 10 year bond rate. Where the surcharge debt is deferred until a superannuation benefit is payable to you, the maximum amount of surcharge that will be payable is an amount equal to 15% of the employer share of the benefit that accrued after 20 August 1996.

In the event you receive a surcharge tax assessment notice from the ATO it is recommended that you seek independent financial advice regarding the payment or deferment of the surcharge tax. Additional information regarding the Superannuation Surcharge for members of constitutionally protected schemes is available on the ATO web site www.ato.gov.au

If you have not supplied your Taxation File Number to the Police Superannuation Office and your employer contributions are greater than $2,000 a surcharge rate of 15% will apply and you will receive an assessment from the ATO even if your adjusted taxable income is less than $70,000.

The surcharge tax applies to members who were members of superannuation schemes on 20 August 1996. Subsequently members of the Police Superannuation Scheme who have retired since 20 August 1996 may receive a surcharge assessment if their adjusted taxable income exceeded the adjusted taxable income thresholds outlined above. Members of the Police Superannuation Scheme who retired prior to 20 August 1996 will not be affected by the surcharge tax.

Member Information

For information on superannuation contact the Police Superannuation Office. Group information sessions can be arranged upon request.

Phone: 8204 2964 or 8204 2965. Fax: 8204 2303. Email: polsuper@adelaide.on.net

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