• Taxation of excess contributions learner guide (from 1 July 2013)

    About this guide

    This guide provides an explanation of the treatment of excess concessional and non-concessional contributions for the 2013–14 and later income years. For information on the treatment of excess contributions up to the 2012–13 income year refer to the Excess Contributions Tax learner guide.

    This material has been developed to help train financial planners and must not be used as a legislative support tool in the workplace.

    We made every effort to make sure this material was accurate and up-to-date as at 2 May 2016 but we advise users to:

    • check for any changes that have affected the currency of this material
    • conduct their own research and inquiries regarding interpretation of law.

    We accept no responsibility for any loss or damage incurred as a result of the use of this material in personal transactions that are not part of our official business.

    Materials

    If you choose to refer to the references in this guide, you will need access the ATO Legal database on our website.

    Time

    It should take you approximately two hours to complete this learner guide.

    Introduction

    This guide aims to provide a general understanding of excess contributions, and discusses important issues, key concepts and the governing legislation.

    After completing this guide you will be able to:

    • describe how excess contributions are treated, including options available
    • calculate the tax payable on excess contributions
    • explain the rights of review available
    • outline the release authority requirements.

    The purpose of the caps

    The purpose of the excess contributions rules is to make sure the amount of concessionally-taxed superannuation benefits a person receives is from the super contributions made over the course of their life.

    Since 1 July 2007, employers are entitled to a full deduction for all contributions to super on behalf of their employees when certain conditions are met. Self-employed (and other eligible people) are also entitled to a full deduction for any amount they claim as a personal super deduction, to the extent that it does not create or increase a loss.

    The removal of age-based deduction limits, reasonable benefit limits (RBLs) and tax on super benefits from taxed funds for people 60 years and over has increased the concessions provided to super.

    Together with the continuing tax exemption provided for income from super assets supporting a pension, and the concessional rate of tax on income of complying super funds, these changes make super an attractive way to retain assets and minimise tax.

    There is an incentive for people to transfer income producing assets currently held outside super to the concessionally taxed super system.

    To ensure super tax concessions are targeted appropriately, limits are placed on the amount of super contributions a person can make that receive concessional treatment.

      Last modified: 07 Dec 2016QC 50732