Issue
Is the superannuation provider liable to pay the superannuation contributions surcharge under subsection 10(2) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (SCT Act) when the member's surchargeable contributions are transferred to another superannuation provider after an assessment is received but before the surcharge is paid?
Decision
Yes. The superannuation provider is liable to pay the surcharge in accordance with subsection 10(2) of the SCT Act as the holder of the surchargeable contributions when the surcharge assessment on those contributions is made.
Facts
The provider (Provider A) receives a surcharge assessment in respect of the member's surchargeable contributions for the financial year. Subsequently, Provider A receives instructions from the member to transfer the contributions to another provider (Provider B). Provider A completes the transfer and the contributions are transferred to Provider B prior to the due date for payment of the assessment. However Provider A did not retain any amount from the member's account to pay the surcharge liability in respect of the assessment they received prior to the commencement of the transfer process.
Reasons for Decision
Under subsection 10(3) of the SCT Act, a provider is not liable to pay the surcharge assessment if they cease to hold the contributions, or begins to pay a pension or annuity based on those contributions, before receiving the notice of assessment.
In accordance with subsection 10(2) of the SCT Act, Provider A is liable to pay the surcharge as holder of the contributions when the assessment of the surcharge on the member's contributions was made and because they did not cease to hold the contributions until after the notice of assessment was received.