SPAA warns of 'perfect storm' of contributions cap breaches
Recent Australian Taxation Office figures revealing another increase in excess contributions tax (ECT) breaches foreshadows a potential perfect storm when the concessional contribution cap for those aged 50 and over, with a superannuation balance over $500,000, is halved again from 1 July this year.
The warning, from the Self-Managed Super Fund Professionals' Association (SPAA), follows the ATO's ECT Statistical Report showing that ECT breaches had tripled in one year, with 45,330 excess concessional contributions assessments issued during the 2010 financial year, up from 15,315 recorded in 2008/09 and 18,068 in 2007/08.
The jump in breaches coincided with the halving of the contribution caps on 1 July 2009, SPAA stated.
"Our concern now is there is a very real possibility of another spike in the number of members exceeding their cap when the concessional contribution cap for people aged 50 and over, with more than $500,000 in their account, is halved again from 1 July 2012," said SPAA chief executive Andrea Slattery.
SPAA is advocating for the restoration of the caps to pre-2009 levels. It also wants the Government to revisit the decision to freeze indexation of the concessional contribution cap and to adopt a workable solution for those who unintentionally breach superannuation caps and incur ECT penalties.
SPAA said it was encouraged that the ATO used discretion in 24 per cent of cases where there was a discretion request.
Recommended for you
ASIC has launched court proceedings against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
