The Self Managed Super Fund Professionals’ Association (SPAA) says it will see a spike in members exceeding their cap when the concessional-contribution cap for people aged 50 and over, with more than $500,000 in their accounts, is halved again from July 1 this year.
The industry body says the recent release of the Australian Tax Office’s Excess Contributions Tax (ECT) statistical report reinforced the potential for disaster.
The ATO report showed that during the 2010 financial year, 45,330 excess concessional-contributions assessments were issued – up from 15,315 recorded in 2008/09 and 18,068 in 2007/08.
The significant rise in ECT assessments coincided with the halving of the contribution caps on July 1, 2009.
“The cutting of the contribution caps saw a significant increase in the number of members exceeding the caps, as seen by the dramatic increase in ECT assessments following the change,” SPAA chief executive officer Andrea Slattery said.
“Our concern now is there is a very real possibility of another spike in the number of members exceeding their caps when the concessional-contribution cap for people aged 50 and over, with more than $500,000 in their accounts, is halved again from July 1, 2012.
“We will continue working closely with the government to address this issue, advocating for the restoration of the superannuation-contribution caps to pre-2009 levels; revisiting of the decision to freeze indexation of the concessional-contribution cap; and adoption of a workable solution for those who unintentionally breach superannuation caps and incur ECT penalties.”
However, SPAA is encouraged by statistics showing the commissioner exercised discretion in almost a quarter of cases in which the ATO received such requests.
“We tend to hear a lot about the cases where discretion was not used, but it is very positive to see discretion is exercised in one in four cases when requested,” Slattery said.
“While the ATO has previously issued a practice statement, we’d encourage it to release further details about the cases in which they did exercise discretion to provide more relevant case studies and as a practical education tool for the industry.”
