The recent May Budget from the Australian Federal Govt. has tried to address excess contributions (over allowable limits). Some groups such as SPAA, and ASMA have concerns..
Reporting at Advisor Voice:
SPAA believes measures do not go far enough and will deny middle Australians the opportunity for saving for a comfortable retirement
The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) has today acknowledged that the Federal Budget has begun to address the excess superannuation contributions problem which results in high penalty taxes for Australians saving for retirement, but believes the measures announced fall way short of a sensible, working solution to rectify the problem.
Under the measures, the Government will provide eligible individuals with the option to have excess concessional contributions taken out of their superannuation fund and assessed as income at their marginal rate of tax, rather than incurring excess contributions tax. This measure will apply where an individual has made excess concessional contributions of up to $10,000 in a particular year and will only be for breaches in 2011-12 or later years, and only the first time the breach occurs.
“This is a positive step aimed at reducing instances of inadvertent concessional cap breaches but this measure provides no relief to individuals who may have incurred excess contributions tax in 2007/08, 2008/09, 2009/10 and 2010/11 financial years,” said Andrea Slattery, SPAA CEO. “It will also provide no relief for individuals who inadvertently breach their non-concessional cap either before or after 1 July, 2011,” she said.
“SPAA believes this measure will result in more middle Australians being caught by inadvertent errors as they try to make legitimate moves to save for a comfortable, self funded retirement.”
The Australian Self-Managed Super Fund Members Association (ASMA) has labelled the Government’s Budget initiatives for concessional contributions caps ‘unworkable’ and likely to ‘drive up costs’.
ASMA director Anna Carrabs said the cost of implementing the changes – such as increasing the concessional cap limits for over-50s with balances less than $500,000 and allowing refunds for excessive concessional contributions up to $10,000 – far outweighed any benefits.