(a) a fellow or an accredited member of the Institute of Actuaries of Australia; and
(b) approved by the Minister; and
(c) appointed by the Board as the actuary for the purpose of this section;
affected member means in relation to a benefit reduction under subsection (2) or (3) a person who is a member of the Fund immediately before the date from which that reduction commences to apply;
after-tax benefit means the amount of benefit after allowing for income tax calculated at the rates and in the manner as at the date of commencement of section 155 of the Public Sector Superannuation (Administration) Act 1993 applicable to a person aged 55 years or more;
detriment means receiving a lesser amount of after-tax benefit than would have been received if the benefit—
(a) had not been reduced in accordance with subsections (2) and (3); and
(b) had been an untaxed benefit;
S. 74C(1)
def. of post‑June 1983 component amended by No. 120/1994 s. 52(c).
post-June 1983 component has the same meaning as in section 27A of the tax law;
rebatable 27H amount has the same meaning as in section 159SJ of the tax law;
tax law means the Commonwealth Income Tax Assessment Act 1936;
taxed element has the same meaning as in section 27A of the tax law;
taxed in respect of a benefit means a benefit in relation to which there is a taxed element or a rebatable 27H amount as the case may be;
untaxed in respect of a benefit means a benefit in relation to which there is no taxed element or rebatable 27H amount as the case may be.
(2) If before the commencement of section 155 of the Public Sector Superannuation (Administration) Act 1993 the Board determined that any part of the post-June 1983 component of a benefit paid or payable to a member of the Fund was to be classified for the purposes of the tax law as taxed, then the benefits accruing in respect of members of the Fund in relation to the period after 1 July 1993 (and any relevant maximum benefit) must be reduced on the basis determined by an actuary and approved by the Minister.
(3) If at any time after the commencement of section 155 of the Public Sector Superannuation (Administration) Act 1993 the Board determines that any part of the post-June 1983 component of a benefit paid or payable to a member of the Fund is to be classified for the purposes of the tax law as taxed, then the benefits (including any relevant maximum benefit) must be reduced on the basis determined by an actuary and approved by the Minister.
(4) In addition to any other form of determination by the Board, the Board shall be deemed to have made a determination under subsection (2) or (3) if it fails to issue a relevant notice to a benefit recipient under the tax law classifying all of the post-June 1983 component of a benefit payable to a member of the Fund as untaxed.
(5) In determining the basis of the reduction required under subsection (2) or (3), the actuary must aim to ensure as far as practicable that—
(a) the cost of the Fund to employers participating in the Fund is not greater than what would have been the employer cost if the income of the Fund was from 1 July 1988 not subject to tax; and
(b) no unreasonable detriment is caused to an affected member of the Fund.
(6) If, having received an application from an affected member in accordance with subsection (7), the Board is satisfied that a reduction in benefits has resulted in an unreasonable detriment to the member in respect of a benefit which has become payable to the member, the Board may take such steps, including without limitation increasing the benefit, as the Board considers necessary to avoid or compensate for that detriment.
(7) An affected member may within 3 months of a benefit becoming payable from the Fund (or any longer period approved by the Board if the Board considers that there are special circumstances) apply to the Board for a review of the amount of the benefit.
(8) The application must be in a form and contain and be accompanied by information prescribed by the Board.
(9) The Board must not consider an application for review under this subsection on any ground other than unreasonable detriment.
(10) In determining whether an unreasonable detriment exists and the extent of that detriment—
(a) the Board must act on the advice of the actuary, given either generally or in any specific case; and
(b) the actuary must have regard to the following factors—
(i) the receipt by a member of a post-June 1983 component of the benefit classified for the purposes of the tax law as a taxed element rather than as an untaxed element; and
(ii) the rates of tax and the basis for its assessment under the tax law as at the date of commencement of this Act in respect of a benefit that becomes payable to a person aged 55 years or more; and
(iii) any other matters the actuary considers relevant.
S. 74CA inserted by No. 29/2000 s. 13.
74CA Surcharge debt account
(1) The Board must establish and maintain a separate surcharge debt account for each contributor.
(2) The Board must debit to a contributor's surcharge debt account—
(a) any superannuation contributions tax paid or payable by the Board on contributions in respect of the contributor as a result of the operation of the Commonwealth Superannuation Contributions Tax (Assessment and Collection) Act 1997 to discharge the liability imposed under that Act; and
(b) if the contributor's surcharge debt account is in debit at the end of a financial year, interest on the amount by which the account is in debit, calculated at the same rate as the rate determined under section 16 of the Commonwealth Superannuation Contributions Tax (Assessment and Collection) Act 1997; and
(c) any debit adjustment to the amount debited under paragraph (a).
(3) The Board must credit to a contributor's surcharge debt account—
(a) any pre-payment by the contributor to the Board in respect of any payment made or to be made by the Board to discharge or partially discharge the liability imposed under the Commonwealth Superannuation Contributions Tax (Assessment and Collection) Act 1997; and
(b) any credit adjustment to the amount debited under subsection (2)(a); and
(c) any surcharge deduction amount under subsection (4); and
(d) an amount to achieve a nil balance after all the debits under subsection (2) and all the credits under paragraphs (a) to (c) have been made.
(4) If—
(a) the Board discharges the liability imposed under the Commonwealth Superannuation Contributions Tax (Assessment and Collection) Act 1997 under section 7 of that Act; and
(b) benefits become payable to or in respect of a person who has been a contributor; and
(c) the person's surcharge debt account is in debit when those benefits become so payable—
then, despite anything in any Act or in any trust instrument, contract or other document, the Board may reduce those benefits by an amount determined in writing that, in the Board's opinion on the advice of an actuary, would be fair and reasonable having regard to the matters specified in subsection (5).
(5) In making the determination, the Board must have regard to the following—
(a) the amount by which the person's surcharge debt account is in debit when those benefits become payable;
(b) the value of the employer-financed component of those benefits;
(c) the value of the benefits that, for the purpose of working out (under the Commonwealth Superannuation Contributions Tax (Assessment and Collection) Act 1997) the surchargeable contributions reported for the person, were assumed to be likely to be payable to the person on his or her ceasing to be a contributor;
(d) whether the person has or had qualified for his or her maximum benefit entitlement under this Act;
(e) any other matter that the Board considers relevant.
(6) The amount determined under subsection (4) by the Board must not be more than 15 per cent of the employer-financed component of that part of the benefits payable to the person that accrued after 20 August 1996.
(7) For the purposes of subsection (4), if the benefit is in the form of a pension entitlement, the deduction is to be made by the Board commuting the person's pension entitlement to the extent determined by an actuary appointed by the Board to be necessary to meet the amount determined under subsection (4).
(8) The exercise of the power of commutation under subsection (7) does not affect the exercise of any other commutation rights under this Act.
S. 74CB inserted by No. 29/2000 s. 13.
74CB Recovery of surcharge where person entitled to deferred benefit
(1) This section applies if—
(a) a person becomes entitled to a deferred benefit under this Act; and
(b) any superannuation contributions tax is paid by the Board on contributions in respect of the person, made when the person was a contributor, as a result of the operation of the Commonwealth Superannuation Contributions Tax (Assessment and Collection) Act 1997 to discharge the liability imposed under that Act; and
(c) the notice of surcharge assessment is issued after the person ceased to be a contributor.
(2) The Board must reduce the person's deferred benefit to the extent determined by an actuary appointed by the Board to be necessary to recover the amount referred to in subsection (1).
(3) The Board must advise the person in writing as to the actuary's determination.
(4) The exercise of the power under subsection (2) does not affect the exercise of any other commutation rights under this Act.
S. 74CC inserted by No. 29/2000 s. 13.
74CC Commutation of pension to meet surcharge liability
(1) The power of commutation under this section applies if—
(a) a person is receiving a pension under this Act; and
(b) the person receives a notice of surcharge assessment on contributions made in respect of the person when he or she was a contributor from the Australian Taxation Office for which he or she is personally liable; and
(c) the person makes an election in accordance with subsection (2).
(2) The election must—
(a) be made within the period of 3 months after the day on which the assessment is made; and
(b) be made in a manner approved by the Board; and
(c) authorise the Board to pay on the person's behalf the amount of the surcharge assessment directly to the Australian Taxation Office.
(3) The Board must commute the person's pension to the extent determined by an actuary appointed by the Board to be necessary to pay the amount of the surcharge assessment.
(4) The Board must advise the person in writing as to the actuary's determination.
(5) The exercise of the power of commutation under this section does not affect the exercise of any other commutation rights under this Act.
S. 74D inserted by No. 102/1995 s. 21, amended by No. 36/2019 s. 13.
Section 74C - State Employees Retirement Benefits Act 1979 - Taxation on benefits | Zoe