27 May 11
On the Budget “fix” for excess contributions tax
MEMBER 78 writes:
“I reply to the Senior Tax Counsel’s comment in last week’s TaxVine - see 2011 TAXVINE No 19 (20 May 2011).
I appreciate the work that The Tax Institute are doing to improve our taxation system. The Tax Institute members are paying out of our membership fees for the debate on tax policy in Australia.
However the excess contributions tax should not be seen as revenue generating. If the government needs to raise revenue then increase the tax rates or, if you do not like the people who can afford to put more than $11,000 into super by mistake, then increase the top tax rate. The tax rates already have not been indexed for the 2011/12 year, thus increasing the tax take via the infamous bracket creep.
The Tax Institute needs to keep the tax debate on a level of honesty and not on expediency. The Tax Institute is the only institution in the country that can discuss taxation dispassionately.”
And MEMBER 79 writes:
“I consider the Budget proposals did not resolve the issue. The excess contributions tax when introduced was poorly communicated by the Government and tax education and advocacy groups. The Government should have and must have been aware that there would be accidental excess contributions. It put in a discretionary clause to the legislation.”
THE TAX INSTITUTE’S SENIOR TAX COUNSEL, ROBERT JEREMENKO, RESPONDS:
“The Government’s announced changes to the application of the excess super contributions tax (ECT) will resolve the issue of the ECT applying to the vast majority of inadvertent first-time breaches of the concessional caps. This is a good result that we welcome. For those instances that will not be affected by the changes, there of course remains the opportunity for the Government to examine further reform. The Tax Institute will continue to advocate for reforms that lead to a better tax system and we look forward to our members' contributions.”