Issue
Is the taxpayer, entitled to amend an assessment of surcharge on a termination payment in accordance with the Termination Payments Tax (Assessment and Collection) Act 1997 (TPTA) where the eligible service period was incorrectly reported?
Decision
Yes, the taxpayer is entitled to amend the termination payments surcharge where the eligible service period was incorrectly recorded.
Facts
The taxpayer received an ETP group certificate from the employer with an incorrect commencement date. The commencement date was reported as being after 20 August 1996, and should have been several years earlier than the 20 August 1996.
The eligible termination payment was received after 20 August 1996. The eligible termination payment consisted entirely of Post June 1983 untaxed element. The taxpayer's adjusted taxable income (ATI) for termination payments surcharge was above the surcharge threshold for the year of income meaning that surcharge was payable.
Reasons for Decision
When a termination payment has been made after 20 August 1996, the termination payments surcharge is payable only on the part of the termination payment that is taken to have accrued after 20 August 1996 under section 9 of the TPTA.
Section 12 of the TPTA allows the Commissioner to amend an assessment of surcharge, where the amount of the payment is taken to be greater than the amount that should be used for calculating the assessment.
As a result of the incorrect reporting of the start date of the eligible service period, all of the lump sum amount was taken to have accrued after 20 August 1996. This meant that the entire eligible termination payment was surchargable.
The amendment reduces the portion of the eligible termination payment subject to the surcharge.