Colonial First State (CFS) has warned that Australians using electronic transfers to boost their superannuation must act now, or risk getting hit with a hefty tax.
In a statement yesterday, CFS said 22 per cent of customers last year missed the 30 June cut off when making non-concessional contributions via electronic funds transfer or BPay in the final week of the 2015-16 financial year.
This was despite having requested funds be transferred before 1 July. However, the 24-hour settlement period meant payments were delayed, CFS said.
This year, however, those missing the cut off date would be assessed against the new reduced non-concessional cap of $300,000 for people under 65, the statement said.
The warning comes as CFS saw another spike in voluntary contributions in May, up 89 per cent since April, and surging 166 per cent compared to May in the previous year.
Colonial First State executive manager Craig Day said although contribution rates had been high over the last six months, there is still a risk that some people could be left behind, with 97 per cent of CFS customers making non-concessional contributions electronically.
“An electronic contribution is only made when money hits the fund’s bank account. Therefore a transfer which is made on 30 June that is subject to a 24-hour settlement may not arrive in time,” Mr Day said.
“While 30 June is the formal deadline before the super cap is reduced, people using electronic transfers to make contributions need to do so well before this date to ensure their super is assessed under the old cap of $540,000 for those under the age of 65.
“If they miss the cut off, people making NCCs of more than $300,000 may be issued with an excess contributions notice by the ATO and may need to take the excess back out of super, or risk having to pay the excess non-concessional contributions tax.”
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