Mixed response to contribution cap fiddling

Measures announced in the Federal Budget to address the highly unpopular excess concessional superannuation contributions penalties have drawn a mixed response from the industry.

Association of Superannuation Funds of Australia chief executive Pauline Vamos welcomed the move to allow people a first-time-only chance to have excess contributions of up to $10,000 refunded to them, giving them the option to take those contributions out of their superannuation fund and have it assessed at their marginal rate of tax, rather than incurring a potentially higher rate of excess contributions tax.

While ASFA continues to advocate for a reinstatement of the original caps this will allow people to recover from their mistake and learn from it, Vamos said.

“This is a commonsense decision from the Government which reflects the fact many people breach the caps inadvertently,” Vamos said.

The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) was far more critical of the measures, which it said only begin to address the excess contribution problem and fall way short of a sensible, working solution.

SPAA chief executive Andrea Slattery said it was a positive step but would not help individuals who made excess contributions in the current financial year or in the three preceding financial years.

SPAA also expressed disappointment that the caps were not restored to their pre-2009 levels of $50,000 rather than $25,000.