Issue: 214
Sent: 11-05-2010 08:37:04
In this issue:

A Tax on Super Profits or a Super Tax on Profits?A How To Book Of Self Managed Super FundsThe Easiest way to do a Client NewsletterExcess Super ContributionsEmail Marketing Business Opportunity - Helen Bairstow
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Excess Super Contributions

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

The tax office has released an Interpretative Decisions (2010/104) about excess contributions tax. The ATO was asked to answer a question whether excess contributions would be assessed for excess non-concessional contributions tax even though a fair proportion of the contribution had been refunded to the contributor. The contributions were made in the 2007 financial year and it was claimed they had been made in error.

The ATO says that the contributions would be counted for excess tax purposes even though they had been refunded. In providing some analysis for their conclusion the ATO refers to a High Court case, a NSW Supreme Court Case, a Super Complaints Tribunal case, an APRA document and the its Tax Ruling on super contributions (TR 2010/1).

The ATO paraphrases the APRA document as saying that, the case for restitution (ie refund) might occur "where the trustee of a superannuation fund is the recipient of an amount greater than was intended, for example, because of a clerical, transcription or arithmetic error".

The ATO argue that in the case presented to them, the case for restitution had not been established.

This whole issue of excess contributions is very difficult. But it would seem to be impacting very few taxpayers (overall). And the vast majority of these people seem to be the better off.

I'm not dismissing the horrible problems this tax delivers unexpectedly to some people. My purpose is merely to state that sometimes tax problems get solved when they impact enough taxpayers.

In many respects this excess contribution tax issue reminds me of some slowly emerging Reasonable Benefit Limit problems just before the 1990 election. On 15 February 1990, the then Treasurer, Paul Keating, announced an important concession which stopped some RBL problems for those getting near to retirement. On 16 February 1990 the Government asked the Governor General to prorogue Parliament for what they expected to be a fairly difficult election. (If my memory serves me correctly they were returned with an increased majority.)

Keating's change created more complexity and confusion but it solved a potential political problem.

Will the Rudd Government deal with excess contributions the same way? Interestingly the excess contribution issues have been created by Coalition policy but it's too complex an argument to make the problem stick with its creator.

On another note, the world seems to slow down a little just before Federal Budget time.

There seems to be a general expectation that there will not be many announcements to interest us this year. Most of the changes (resources super tax, super contributions concessions, more Super Guarantee etc) already seem to be known.

We've all been here before thinking that not much would change and then all hell has broken loose. A good example of this is 2006.

As always, if there is anything of interest in this year's budget we will send out a special issue of this free email service.

Finally please consider purchasing a copy of my book. You can look at the contents page at the following link:

The second edition has just been released.

Two 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:

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This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.

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