Sent: 28-02-2012 13:19:02
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Excess Contributions Tax Reform
Now that the Labor Party has decided to keep with the status quo, hopefully the political landscape will settle down a bit for awhile and we can get some movement on the various super and tax reforms.
There's a fairly long list of issues that need to be dealt with.
One issue that is missing is excess contributions tax. It really is a stinking mess and one crying out for some substantial changes. The system is simply broken. It costs super investors, super funds and the Tax Office a fortune to run the system. I would be very surprised if the cost to collect this tax is covered by the money raised from it.
I have been thinking of several solutions to this problem and I'll present them in a forthcoming article in my DIY Super column that appears in The Australian newspaper every Tuesday.
The first point is that all compulsory contributions should not be counted towards the contribution caps. These are contributions which have to be made under Government legislation and therefore tax penalties should not be imposed.
Secondly for all other contributions I think we should be given a lifetime super contribution limit. This would hopefully prevent once off or even occasional excess contribution tax problems from arising. You need to be careful as to how the once off limit applies and works. Appropriate and proper reporting would be essential and the ability to withdraw a contribution from the system would have to be available. There obviously would need to be some transitional arrangements in place. I will detail my thoughts in a column in the near future.
Version 6.0 of my SMSF book is now available.
You can see all the changes that have been made between Version 5.1 and 6.0 (the latest edition).
You can look at the contents page at the following link: http://www.atcbiz.com.au/r.php?r=0mjd6ne
For details of the changes made from version 5 to version 6 visit: http://www.atcbiz.com.au/r.php?r=d5xcpch
As you'll see from the list there have been many changes.
Two purchase options are available - once only subscription - $55 inc GST - or an annual subscription will gives you access to all the updates made throughout the year ($120 inc GST). The book can be purchased at the following link: http://www.atcbiz.com.au/r.php?r=5a4agqb
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