These changes were announced in the 2014 Federal Budget, and according to the Government statement would mean:
“If an individual chooses this option [withdrawing excess non-concessional contributions], no excess contributions tax will be payable and any related earnings will be taxed at the individual’s marginal tax rate.
Individuals who leave their excess contributions in the fund will continue to be taxed on these contributions at the top marginal rate.”
Though the change is meant to apply from 1 July 2013 the consultation process is still proceeding. According to SPAA the legislation is “being drafted”, and meetings are being held between Treasury and “representatives of the superannuation industry, including the SMSF Professionals’ Association of Australia”.
In response to enquiries from members SPAA has revealed some of the details of the current consultation over the issue of ‘associated earnings’:
“The discussions include how the penalty interest will be calculated. In the announcement in this year’s Budget the proposal was to determine the ‘associated earnings’ such as the earnings rate of the fund to be used to calculate the penalty interest. The view of the superannuation industry is that there are number of complex issues surrounding the calculation of the ‘associated earnings’ method and a number of possible alternatives have been put forward to Treasury. At this stage no decision has been made on the method to be used.”
“It is expected that the legislation will be debated in the parliament in the Spring 2014 sittings which is prior to Christmas”, says SPAA.
SPAA notes that any contributions made after 1 July 2013 would likely be reported to the ATO after 31 October 2014, so it is “very unlikely that any non-concessional contributions assessments under that law will be issued prior to the proposed legislation being considered in the parliament”.
“As soon as we have further information we will update you on the progress of the legislation”, says SPAA.
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