Issue
Whether the lump sum payment in arrears is included in the calculation of the member's adjusted taxable income (ATI) for superannuation contributions surcharge purposes?
Decision
Yes. The lump sum payment in arrears is included in the calculation of the member's ATI for superannuation contributions surcharge purposes under section 43 of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCTA).
Facts
The member, who was a holder of surchargeable contributions, received a superannuation contributions tax assessment for the financial year.
The member's taxable income for the financial year included a lump sum payment that related to the previous financial year (lump sum in arrears).
The Commissioner calculated the member's ATI to include the lump sum payment in arrears.
Reasons for Decision
Section 43 of the SCTA defines a member's ATI for a financial year. ATI includes the member's taxable income less any amounts that were eligible termination payments (ETP) within the meaning of subsection 27A(1) of the Income Tax Assessment Act 1936 (except payments made under paragraph (a) of the definition of ETP). It also excludes lump sum payments for unused annual leave and long service leave paid on termination of employment because of bona fide redundancy, early retirement or invalidity.
The definition of ATI in section 43 of the SCTA does not exclude lump sum payments in arrears.
The lump sum payment in arrears received by the member in the financial year formed a part of the member's taxable income for the year. Accordingly, the whole amount of the payment in arrears is included in the calculation of the member's ATI for the superannuation contributions surcharge purposes.