The Govemment's amendment to the superannuation surcharge legislation is designed to strengthen its constitutional position. Although legal advice confirmed the legislation was valid in original form the amendment was introduced to put the constitutionality of the legislation beyond attack.
Removal of clause 34 alters nothing as far as liability to the surcharge is concerned. The legal liability for the surcharge assessment remains with the superannuation provider.
The clause was originally inserted at the request of some sections of the superannuation industry - in particular defined benefit funds where employer sponsors were seeking a provision which required members benefits to be reduced (although clause 34 did not result in the mandatory reduction of benefits - it was optional).
Clause 34 was not central to the operation of the scheme. As a result the Government was quite happy to delete it in the committee stage of the House of Representatives debate.
Trustees may wish to adjust accounts for the surcharge, in respect of benefits accruing after 20 August 1996. To facilitate this, the benefit standards in SIS regulation 13.16 will be amended. This will allow trustees to amend deeds to adjust benefits for surcharge liability.
This is consistent with the option allowed to trustees to adjust benefits to pay superannuation contributions tax which was introduced in 1988.
CANBERRA
26 March 1997
Contact: Richard King (06) 2777360 or 0419683 586