The Superannuation (Excess Concessional Contributions Charge) Bill 2013 and the Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Bill 2013 have both been passed by the House of Representatives and will now be considered by the Senate.
UPDATE 24 June: Bills passed by Senate. Awaiting Royal Assent.
The Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Bill 2013 amends the Income Tax Assessment Act 1997 and the Taxation Administration Act 1953 to establish a new system for the taxation of individuals with concessional contributions in excess of their annual cap. This Bill also allows individuals to elect to release an amount of excess concessional contributions from their superannuation interests. Any released amounts proportionately reduce their non-concessional contributions.
The Superannuation (Excess Concessional Contributions Charge) Bill 2013 imposes a charge on taxpayers who have concessional contributions in excess of their annual cap to ensure that they do not receive an advantage over those taxpayers who do not exceed their annual cap.
If passed, the Bills the amendments will apply in the 2013-14 income year.
From 1 July 2013, the concessional cap for individuals aged 59 and over will be raised to $35,000 and from 1 July 2014, the concessional cap for individuals aged 49 and over will be increased to the same level.
Currently individuals must pay excess concessional contributions tax at a rate of 31.5 per cent on their excess concessional contributions (in addition to the tax on contributions paid by the super fund). The Bill repeals the excess contributions tax in relation to excess concessional contributions and instead provides for excess concessional contributions to be included in an individual’s assessable income and subject to a charge to account for the deferral of tax.
Individuals may choose to pay the liability from their own sources, or use their superannuation monies. A non-refundable tax offset of 15 per cent is provided to individuals to account for the income tax paid by the fund.
Individuals who exceed their concessional cap are also liable to a new interest charge, the excess concessional contributions charge, which is designed to account for the income tax that would otherwise have been paid earlier on these amounts had they been taken as salary, wages or profits.
