Superannuation surcharge is imposed on surchargeable contributions if a member’s adjusted taxable income (plus notional employer contributions) exceeded certain levels before 1 July 2005. Surcharge is calculated by the Australian Taxation Office which informs DFRDB. Surcharge amounts are recorded in surcharge debt accounts.
Although surcharge has ended, surcharge debt amounts must still be paid.
Please refer to our:
DFRDB Book [PDF 2 MB]
Surcharge debt payment
Any amount in your surcharge debt account can be paid in part of full progressively during your DFRDB membership – or left to accrue with interest (please see below). Please use our DFRDB and MilitarySuper member contributions surcharge remittance advice form [PDF 802 KB].
Your payment must be received by DFRDB by close of business on 30 June if you wish to avoid the imposition of interest for that financial year. Any remaining surcharge debt amount is payable the day a benefit is paid and will be deducted from the amount which is paid to you or transferred to another fund.
Important considerations apply, especially if you have less than 20 years of effective service.
Interest on surcharge debt amounts is applied at the 10-year Treasury bond rate. It must be imposed on any amount in a surcharge debt account at 30 June each year.
Surcharge debt amount variations
If you have a surcharge debt amount when your benefit is to be paid, Commonwealth Superannuation Corporation (trustee of DFRDB) must determine a fair and reasonable amount to deduct from your member benefit. Commonwealth Superannuation Corporation may vary the amount you must fund when your benefit becomes payable.
Certain matters set out in legislation must be considered in particular your surcharge debt amount cannot be more than 15% of the employer-financed component of your benefit accrued between 20 August 1996 and 30 June 2005. Guidelines set out that surcharge deduction amounts will be the same as your surcharge debt account unless:
- in special circumstances relating to the retiree, deduction of that amount would cause the retiree to suffer an unfair or unreasonable financial detriment, or
- the amount of the surcharge debt was based on an incorrect calculation of surchargeable contributions.