On 18 February 2015, Treasury released exposure draft regulations as part of the legislative reforms introduced by the Government on 4 December. The regulations continue the process started by the Government’s that addresses inadvertent breaches of the contribution caps where the error would result in a disproportionate penalty.

BLOG - Superannuation Excess Non-Concessional Contributions Reforms

Currently, superannuation contributions that exceed non-concessional contributions cap are taxed punitively at 49% with the effect that a high income earner could effectively pay a marginal tax rate of up to 98% in relation to excess non-concessional contributions (based on 2014/15 income tax rates).

Under the legislation introduced last December, excess non-concessional contributions tax will not be imposed on excess contributions to the extent that the excess amount is released from the member’s superannuation fund. The draft regulations enable superannuation providers to release amounts to individuals who elect to withdraw non-concessional contributions under the reforms and stipulate the following:

 

  • 85% of the associated earnings can be withdrawn from 1 July 2013;
  • The full amount (i.e. 100%) of the associated earnings will be included in assessable income but a 15% non-refundable tax offset will be provided;
  • Superannuation funds must release the excess amount plus 85% of the associated earnings within 21 days of receiving a release authority from the Commissioner; and
  • The amendment period for assessments of income tax will be 4 years for individuals that elect to release an amount of non-concessional contributions.

If you would like any assistance with self-managed super funds please contact:

Vince Ilarda on 08 9443 5199 or vince@prosperityaccountants.com.au.