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AIST calls for flexibility on concessional contributions
The 'bring forward rule' for non-concessional contributions should also be applied to concessional contributions, according to the Australian Institute of Superannuation Trustees (AIST).
In a submission to an exposure draft on the refund of excess concessional contributions, the AIST said that by tripling the amount of concessional contributions allowed in a single year to $150,000 (by 'bringing forward' contributions from future years), the likelihood of a taxpayer breaching the caps and being charged excess contributions tax would be reduced.
Notwithstanding its position on the 'bring forward rule', the AIST supported the Government's intention to refund excess concessional contributions below $10,000. Under the Government's proposal, excess contributions below $10,000 would be refunded from a taxpayer's superannuation fund and assessed at their marginal income tax rate. However, this would be a 'one-off' offer and would not be available in later years.
If a taxpayer makes excess contributions over $10,000, they lose their 'one-off' right to a refund and the excess contributions tax is applied to the full amount. The taxpayer would also lose their right to a refund in later years. The AIST believes that this proposal "removes any taxpayer choice and is unnecessarily draconian".
If the refund is a 'one-off' offer, taxpayers should be allowed to decide which year they wish to receive it, said the AIST. But even so, the refund should not be withheld from taxpayers who have breached the concessional contribution cap in recent years, the AIST said.
The industry body also argued that the cut-off amount of $10,000 should be indexed to Average Weekly Ordinary Time Earnings.
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