Surcharge
On 20 August 1996 the Government introduced an extra tax on the employer superannuation contributions of high income earners. This tax was subsequently abolished from the beginning of the 05/06 financial year.
The process was that the ATO would advise AvSuper of any surcharge tax payable, and AvSuper paid this tax. For accumulation account members, their share of the tax was immediately deducted from their account balances.
Defined Benefit Members and the surcharge
The surcharge tax for defined benefit members was recorded as a debt to AvSuper and interest was applied to this debt at the earning rate applicable to the assets backing the defined benefit scheme. Any outstanding debt was then deducted from the member’s benefit when they ceased employment or elected to transfer to the accumulation fund.
Defined benefit members who still have a surcharge debt can choose to pay the debt off in full or in part at any time by sending a cheque to AvSuper with a brief explanatory note indicating that it relates to surcharge. Your latest statement will indicate whether or not you have a surcharge debt, or you can contact AvSuper.
Defined benefit members may also elect to have their surcharge debt deducted from their accumulation account if they have one. Contact AvSuper for advice on how this can be arranged.
