Amendments to the Excess Contributions Tax get thumbs up from SPAA

Andrea Slattery

The SMSF Professionals’ Association of Association has welcomed the passage in the Senate of the Government’s amendments to the Excess Contributions Tax regime to allow refunding of excess concessional contributions.

SPAA CEO Andrea Slattery says: “We have long championed a refunding solution for excess contributions tax to ensure taxpayers are not treated in a draconian way for accidently breaching their superannuation contribution caps.”

These amendments will allow taxpayers who have exceeded their concessional contribution cap after 1 July 2013 to withdraw the excess contribution from their superannuation fund with the excess contribution being taxed at the taxpayer’s marginal rate, with an additional interest charge levied on the excess.

Unlike the current regime, this measure will not be limited to excesses of less than $10,000 and will not be limited to a once-off refund.

Mrs. Slattery says: “This gives people a genuine chance at rectifying any mistakes they had made with their concessional contributions.

“These new rules strike the right balance between ensuring that taxpayers adhere to the contribution cap while providing adequate penalties for those who breach the concessional contributions cap.”

Although SPAA supports the passage of the legislation, Mrs Slattery adds “that the peak body for SMSFs believes a similar refunding option should apply to excess non-concessional contributions as it is the excess non-concessional contribution breaches that usually attract significant amounts of excess contributions tax. We also believe that the interest rate should not apply retrospectively.

“In some circumstances it can reach a 93% tax rate, and the current remedial options available to members who breach their non-concessional cap are grossly inadequate.”