Beware the taxman
Mike Fitzsimons
Superannuation fund members may inadvertently exceed the concessional contributions cap and be charged a tax rate as high as 93 per cent, according to Plum Financial Services.
Plum managing director Mike Fitzsimons said the company realised that under the new ‘better super’ changes there are many circumstances where members might unknowingly exceed the concessional contributions cap.
This can occur because contributions above the cap attract an additional 31.5 per cent tax, resulting in a total tax payable of 46.5 per cent.
“For members, it is hard to be across all of the new legislative changes to super,” Fitzsimons said.
“There are a number of different factors that come into play when calculating the cap, such as insurance premiums paid on behalf of members by employers. Most members would not connect subsidised insurance to the cap.”
To ensure its members do not suffer such an inconvenience, Plum has implemented a two-tiered awareness campaign that initially targets all members generally and then follows up with those members who are more likely to inadvertently exceed the cap.
“The additional tax for exceeding the cap can put quite a dent in the amount a member is contributing to their super. We think it is vital that super funds do their utmost to ensure members not only fully understand the implications of exceeding the cap, but have the best chance of avoiding doing so should they wish to,” he said.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
