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ATO's tough stance on excess contributions

Closely monitoring your superannuation contributions is critical because the ATO makes no exceptions if you exceed the superannuation contributions caps. A contributions cap sets a limit on the amount of contributions you can make in any financial year. In the 2012-2013 financial year, the limit is $25,000 for concessional (before tax) contributions and $150,000 for non-concessional (after tax) contributions. If you exceed these caps, your excess contributions are likely to be subject to the penalty tax.

 

The ATO has the discretion to disregard excess contributions if special circumstances exist, yet this discretion is not exercised lightly. A number of taxpayers have therefore challenged the ATO’s decision in the Administrative Appeals Tribunal (AAT). Unfortunately, the Tribunal has often sided with the ATO and these taxpayers have been forced to pay the penalty tax. In fact the Tribunal has only found in favour of the taxpayer in two cases. In both cases, the Tribunal held that special circumstances existed because there was a “perfect storm” of events, miscommunications and misunderstandings. With the spike in excess contributions tax (ECT) assessments again expected for the 2012-13 financial year, monitoring your superannuation contributions is critical.
 

Posted in: Tax & ATO News Australia at 21 January 13

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Tax & ATO News Australia

Author: David Hughes

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