Senate passes excess super contribution tax changes
Parliament’s upper house has passed provisions for the removal of “punitive tax rates” on excess super contributions, which the government says will provide a set of “fairer” rules.
Yesterday assistant treasurer Josh Frydenberg announced that the the government had “secured passage” of the Tax and Superannuation Laws Amendment (2014 Measures No.7) Bill.
“This honours our election commitment to make sure inadvertent breaches of the non-concessional contributions cap do not incur a disproportionate penalty," he said.
Mr Frydenberg said the new approach will be fairer to those who make mistakes while discouraging those who embark on aggressive tax planning strategies.
However, AMP SMSF head of policy, technical and educational services Peter Burgess told ifa sister title SMSF Adviser that while the new provisions will provide those who have inadvertently breached their non-concessional cap with additional options, there are still some unresolved issues.
“Even though we [now] have the refunding rules in place, it’s still in most cases a better outcome for clients to seek discretion and [have] that excess reallocated or disregarded,” Mr Burgess said.
“They will avoid paying a concessional contribution charge if it’s an excess concessional contribution or having to pay tax on the associated earnings component if it’s a non-concessional.”
Although successfully receiving commissioner discretion will generally result in a better outcome for clients than using the new refund rules, Mr Burgess said this remains difficult to obtain.
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