Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

Excess non-concessional contributions should not be withdrawn

16 June 2021
| By Jassmyn |
image
image image
expand image

If proposed changes to the non-concessional contribution (NCC) cap do not proceed today, or if the effective date is changed, advisers need to ensure clients do not withdraw any excess NCC amounts as lumpsums as this will not fix the problem, according to Colonial First State (CFS).  

The eligibility age for bring-forward contributions of up to $300,000 is set to increase from under 65 to under 67 if the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020 passes the Senate today. 

CFS head of technical services, Craig Day, said passage of the bill would be welcomed as it would provide certainty for clients aged 65 and 66 and would provide peace of mind for fund members who had already made non-concessional contributions of up to $300,000 in 2020/21 prior to turning 67. 

“However, if the proposed changes do not proceed, or the effective date is changed to 1 July 2021, it will be important for any clients who may now have exceeded the existing caps to sit tight and wait to be issued with an excess non-concessional contribution determination and then follow the process to have their excess contributions (plus a deemed earnings amount) released from superannuation,” Day said 

“If they panic and instead try to withdraw any excess NCC amounts as a lump sums, the withdrawals will not reduce the amount of their excess NCCs and will not fix the problem.  

“It’s also important to realise a trustee cannot just simply ‘reverse’ a contribution a member has made just because it ends up exceeding their NCC cap. In this case, the excess NCC process will still need to be followed.” 

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

The succession dilemma is more than just a matter of commitments.This isn’t simply about younger vs. older advisers. It’...

4 days 4 hours ago

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

4 weeks 1 day ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 month ago

ASIC has released the results of the latest adviser exam, with August’s pass mark improving on the sitting from a year ago. ...

6 days 22 hours ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

2 weeks 1 day ago

The inquiry into the collapse of Dixon Advisory and broader wealth management companies by the Senate economics references committee will not be re-adopted. ...

2 weeks ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND