A legislation to amend the treatment of surplus non-concessional superannuation contributions has recently been passed by the Government. Under the new measures, the double taxation on after tax contributions put into superannuation over the maximum limit (presently at $180,000 annually) has been removed. This affects any surplus non-concessional contributions made beginning 1 July 2013.
The old system required that non-concessional contributions made in excess of the cap be taxed at the highest marginal tax rate. This had caused small, unintended violations leading in unevenly high tax assessments and people essentially paying taxes two times.
Under the new system, new members who violate the caps get an option to have the surplus non-concessional contribution and a related earnings amount (computed by the ATO) withdrawn from their superannuation and the payment returned to them. The related earnings will be added in the person’s personal assessable income and general interest charges will also apply. If the person doesn’t take up the option to withdraw the excess, then the highest marginal tax rate will be applied to the amount.
There will be some charge if the contribution caps are topped, but members are now given an option. There will no longer be an automatic penalty applied to minor violations, thus giving more peace of mind to individuals using contribution plans to make the most out of their retirement benefits.
If you need any help in finalising your year to date superannuation contributions, please talk to one of our team members at PJS Accountants.