The Government has acted on howls of protests from the accounting and financial planning professions by relaxing penalties on excess superannuation contributions for first-time and inadvertent breaches.
Penalties for superannuation fund members who exceed the limits set on extra superannuation contributions (the limit is currently $50,000 for those aged 50 and under) can be as high as 93% under current laws.
But Assistant Treasurer Bill Shorten – who revealed he has been caught out by the excess super penalty regime – has moved to provide some relief for taxpayers who inadvertently breach the limits.
Under new rules, taxpayers who breach the caps by up to $10,000 can ask for the excess contributions to be returned to them.
However, the new refund option will only apply for first-time breaches.
“The Government understands that individuals make mistakes and should not be penalised the first time they exceed the concessional cap for less significant and inadvertent breaches,” Shorten says.
The Government will now consult with industry on the implementation of the measure, but it is likely to find strong support for the move.
Super experts have consistently highlighted the excessive penalties as being one of the most unfair features of Australia’s super system.
Penalties levelled at taxpayers who inadvertently or mistakenly breached the caps – for example, where a taxpayer had two employers making government-mandated super payments into their fund and were pushed over the limits without their knowledge – were seen as particularly harsh.