Under the former regime, taxpayers could pay up to 94% on excess non-concessional contributions. The new legislation allows superannuation fund members to withdraw the non-concessional contributions that exceed the non-concessional cap from their superannuation.
Investment earnings associated with a fund members excess non-concessional contribution will be included in their assessable income and taxed at their marginal tax rate.
The investment earnings are calculated through a proxy earnings rate by applying the ATO’s General Interest Charge rate to the access non-concessional contribution. At 15% tax offset is then passed on to the superannuation fund member as compensation for tax paid on the investment earnings.
SMSF Assoc. Chief executive and managing director Andrea Slattery was among the first to welcome the result, describing it as an important victory for SMSF members.
Slattery said the Senate vote ends a “draconian” system that “severely punished” trustees for infractions that were rarely intentional.
— Mark Smith via the FINANCIAL STANDARD