The latest official word on the status of excess non-concessional contributions was a positive one, but caution is still needed.
The latest official word
The ATO published on Friday 26 September 2014 the official minutes of the most recent Individual Taxpayer Liaison Group Minutes.
In it the ATO stated:
Under the new measure for non-concessional contributions (announced in the May 2014 Budget), individuals will be given the option to withdraw their excess contributions (and associated earnings) and have the earnings taxed in their income tax assessment at their marginal rate. This change recognises that in most cases the breach of the non-concessional contribution cap is not intentional and the previous taxing regime (at top marginal rate) was considered too harsh by the government. The measure is not yet law and the ATO continues to work with Treasury to provide input and advice on the practical application of the proposed changes and transitional arrangements.
Naturally this is positive and the powers that be should be commended for their practical stance and recognition that ‘the previous taxing regime [which is still technically the current regime] (at top marginal rate) was considered too harsh’.
However, certain caution is still needed. See www.dbalawyers.com.au/succession-planning/excess-non-concessional-contributions-abolished-trap-exists
For more information on excess contributions and the recent changes, see www.dbalawyers.com.au/announcements/excess-contributions-tax-latest-developments
No refunds on the cards
On a side note, we are sometimes asked if they are any plans to refund past payments of non-concessional contributions tax, especially given the recognition that this was a tax raised under a regime that was ‘too harsh’. Unfortunately, no. We are aware of no such plans.