Superannuation Contributions Surcharge
Certain contributions made to your super could be subject to an extra tax known as the Superannuation Contributions Surcharge. This page is designed to help you understand what the Superannuation Contributions Surcharge is and whether it affects your super.
What is the Superannuation Contributions Surcharge?
The Superannuation Contributions Surcharge, or ‘Super Surcharge’ is an additional tax on an individual for certain contributions made to a super fund after 20 August 1996 and before 1 July 2005.
Although the Commonwealth Government abolished the Super Surcharge, it does not affect any existing and future surcharge liabilities that arise for certain contributions made between 20 August 1996 and 30 June 2005.
As a member of constitutionally protected funds, such as West State Super, Gold State Super and WA Public Sector Pension Scheme, you are not required to pay your surcharge liability until you have left the fund or start receiving a pension. Therefore, you may still have a future obligation under the surcharge legislation. It generally affects members who earn higher incomes.
Who determines the surcharge liability
The Australian Taxation Office (ATO) calculates your surcharge liability. This is based on information provided by yourself and us when you lodge your income tax return.
When the surcharge applies
The surcharge may need to be paid if your adjusted taxable income is over a certain amount. Generally, your adjusted taxable income is the total of your taxable income plus reportable fringe benefits and surchargeable contributions.
Your adjusted taxable income is compared to the lower and higher income limits to determine the rate of surcharge that will apply to your surchargeable contributions.
If your adjusted taxable income is equal or below the lower income limit for the financial year, then you do not have to pay the surcharge.
If your adjusted taxable income exceeds the higher income limit, then the maximum surcharge rate applies to your surchargeable contributions.
If your adjusted taxable income is between the lower and higher limit, a reduced surcharge rate applies to the surchargeable contribution. The surcharge tax rate is calculated using the following formula:
The amount ‘A’ is different each financial year and is listed in the table below.
Thresholds and surcharge rates
|Income year||Lower income amount||Higher income amount|| A|
(divisor used in rate formula)
2005 - 2006 onward
The Surcharge has been abolished
2004 - 2005
2003 - 2004
2002 - 2003
2001 - 2002
2000 - 2001
1999 - 2000
1998 - 1999
1997 - 1998
1996 - 1997
|Financial year||Maximum surcharge rate|
2004 – 2005
2003 – 2004
1997 – 2003
Surchargeable contributions are certain super contributions that may have surcharge applied to them.
Your surchargeable contributions will depend on the type of fund you are a member of.
Accumulation funds like West State Super
Surchargeable contributions include:
- Employer contributions, including salary sacrifice
- Personal contributions for which you claimed a tax deduction
- The post 20 August 1996 component of an employer eligible termination payment rolled over on or after 1 July 1997
- Any amount allocated to your account on or after 1 July 1997 that we have reported as an allocated surplus amount
If applicable, we would have reported these contributions to the ATO annually on the super member contributions statement.
Defined benefit funds: Gold State Super and WA Public Sector Pension Scheme
Surchargeable contributions for these funds are determined by an actuary using a formula.
We would have reported the notional surchargeable contributions provided by the actuary and any salary sacrificed contributions to the ATO annually on the super member contributions statement.
Additional ATO reporting requirements
We lodge a super member exit statement for constitutionally protected funds when a:
- Member receives a lump-sum payment or begins receiving a pension
- Member transfers their contributions
- Payment to a non-member spouse occurs due to marriage breakdown, or
- Benefit is paid when a member dies
The information on this statement enables the ATO to calculate the member’s final liability.
How the ATO collects the surcharge from you
The ATO keeps a surcharge debt account for you to record the surcharge assessed on the surchargeable contributions we reported for the 1997 to 2005 financial year.
Interest is added to the surcharge debt account based on the outstanding balance at 30 June each year using the 10-year Treasury bond rate.
You can choose to make a voluntary payment to the ATO at any time to reduce the balance of your surcharge debt account. However, you may be disadvantaged by making a payment before your final liability is calculated.
The ATO calculates your final liability after we lodge a super member exit statement for your constitutionally protected fund. The ATO will send you a notice of final liability. You will need to pay this amount within three months.
Your final liability is the lesser of:
- The balance of your surcharge debt account held by the ATO
- A percentage of the employer financed component of the benefit payable to you (or rolled over) that accrued after 20 August 1996 and before 1 July 2005 (Please note this amount is only known when the Final Benefit is paid)
We recommend that you seek professional advice before making any voluntary payments to the ATO.
Other ways of paying your surcharge liability
We provide a facility for you to make the surcharge payment in a tax-effective manner. You can authorise us to withhold part of your final benefit to meet your surcharge liability. This amount will be deducted tax free from your final benefit so you can pay your surcharge liability to the ATO. It will be held in a surcharge liability account.
If you wish to take advantage of this facility, please complete the relevant Benefit access form for your account.
You can also fill out our Retirement Income Pension application form.
When you receive your notice of final liability, please ensure you send us a copy. We will close your surcharge liability account and send you a cheque payable to the ATO, which you can then use to pay the ATO. If the amount is not enough to cover the liability, you will need to pay the shortfall. Any residual balance in the surcharge liability account will be paid out to you and will be subject to any applicable tax.
For more information about the Superannuation Contributions Surcharge, please visit the ATO website.
Thank you for printing this page. Remember to come back to gesb.wa.gov.au for the latest information as our content is updated regularly. This information is correct as at 23 March 2019.