ECT changes add paperwork
Superannuation funds, including self-managed superannuation funds (SMSFs), are facing further administrative requirements as a result of the Government’s changes to superannuation excess contributions arrangements announced in the Federal Budget.
The arrangements — outlined in a discussion paper released by the Assistant Treasurer, Bill Shorten — impose a number of requirements on superannuation providers, including complying with compulsory release authorities issued by the Australian Taxation Office and acting to pay relevant amounts within 30 days.
Individual superannuation fund members affected by the Excess Contributions Tax (ECT) regime will face a number of key choices, including whether or not to accept the one-off refund offer from the ATO or whether to appeal the issue, in which place the refund would be placed on hold until the matter is determined.
The increased burden on superannuation funds and members comes despite the Government saying the majority of the administrative processes were being handled by the ATO.
The changes were announced in the Federal Budget, amid complaints that people were being unfairly penalised under the ECT regime for inadvertent and sometimes unavoidable errors in their superannuation contributions.
In announcing the release of the discussion paper, Shorten said the Government believed the changes made the superannuation system fairer by giving individuals the option to take excess contributions out of their superannuation fund and have them assessed at their marginal rate of tax.
“While the Government believes the high rate of excess contribution tax is important to encourage compliance with the contribution caps, individuals who breach their concessional contribution caps for the first time should be given a second chance,” Shorten said.
AUTHOR
Mike Taylor
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