Debts affecting your benefit
Depending on your individual situation, there are three types of debts which might affect your benefit. These include:
- early release debt
- surcharge debt
- no TFN contributions tax debt.
Early release debt
If some of your scheme benefit is released prior to retirement, due to financial hardship or on compassionate grounds, it will create a corresponding debt account.
The balance of this account increases over time because interest is charged on it at the Fund Earning Rate.
The balance of this account will be deducted from your full benefit entitlement when it is paid. If you defer your benefit, the debt will be deducted from the deferred benefit before it is deferred.
For full details on the early release of benefits, see STC Fact Sheet 2: Early release of superannuation benefit on grounds of severe financial hardship and STC Fact Sheet 6: Early release of a superannuation benefit on compassionate grounds.
Surcharge debt
Until 30 June 2005, PSS members who were high-income earners paid a Commonwealth surcharge tax if their annual taxable income plus reportable fringe benefits and employer superannuation contributions exceeded an annually adjusted income threshold.
The surcharge tax was abolished from 1 July 2005 and surcharge tax is no longer payable on notional employer contributions made on or after this date.
However, you must pay any surcharge debt that you accrued in respect of contributions prior to 1 July 2005. This debt balance accrues interest at the Commonwealth 10-year bond rate each 30 June.
You can find further information about the superannuation surcharge in STC Fact Sheet 1: Information about the Commonwealth contributions surcharge.
No-TFN contributions tax debt
If you have not provided your TFN, the fund must pay additional income tax (34% on top of the 15% contributions tax already paid) on assessable contributions (such as employer and salary sacrifice contributions) made on your behalf. Following recent changes to the Police Regulation (Superannuation) Act 1906, the Trustee requires member benefits to be reduced by the no-TFN contributions tax amount, to enable the fund to recover the additional tax paid.
If you have a no-TFN contributions tax debt amount on your Annual Statement, you may be able to have the amount reduced if you provide your TFN. The fund can recover any no-TFN contributions tax paid in the three years prior to when you provide your TFN.
If you are eligible to receive Additional Employer Contributions (AEC) and have not provided the Fund with your TFN the same taxation rules outlined above will apply. However, rather than creating a debt account your AEC account will be reduced on 30 June each year by the amount of applicable tax.
If you have not provided your TFN, you should consider doing so by contacting Customer Service.