As members may have read in our special Budget Night edition of TaxVine earlier this week, we describe the Federal Budget as leaving Australia waiting for a long-term tax reform plan that is vital to ensure that the country is well positioned for the challenges of the decades ahead. The Government has attempted to tackle half of our Budget problem: expenditure, without committing to a timeline in which to address the other crucial half of the equation: revenue.
The Budget did, however, contain a positive announcement with regards to excess superannuation contributions tax. For any excess superannuation contributions made after 1 July 2013 that breach the non-concessional cap, the Government will now allow people to withdraw those excess contributions and associated earnings. This will mean no excess contributions tax will be payable and any related earnings will be taxed at the individual's marginal tax rate.
The Tax Institute has been a strong advocate for reforming the excess superannuation contribution laws so that inadvertent breaches of the caps are not unfairly penalised. The previous government went some way to addressing the problems, and now this week’s Budget announcement addresses the issues with the non-concessional contributions cap as well.
As always, the devil will be in the detail and we look forward to consulting with the Government on the exact nature of the legislative changes.
Robert Jeremenko CTA