The Self-Managed Super Fund Professionals’ Association (SPAA) has warned that recent Australian Taxation Office (ATO) figures revealing a huge jump in excess contributions tax (ECT) breaches could be a sign of things to come when the caps are reduced further in July.
The ATO’s ECT Statistical Report showed that ECT breaches had tripled in one year, with 45,330 excess concessional contributions assessments issued during the 2010 financial year – up from 15,315 recorded in 2008/09 and 18,068 in 2007/08. The jump coincided with the halving of the contributions caps on 1 July 2009, SPAA said.
When the concessional contribution cap for those aged 50 and over, and with a superannuation balance over $500,000 is halved again from 1 July this year, it could result in a further spike in breaches, SPAA said.
SPAA is advocating for the restoration of the caps to pre-2009 levels, and also wants the Government to revisit the decision to freeze indexation of the concessional contribution cap and adopt a workable solution for those who unintentionally breach superannuation caps and incur ECT penalties.
SPAA said it was encouraged that the ATO used discretion in 24 per cent of cases where there was a request for discretion.
