SMSF advisers will need to revisit the trust deeds of their clients to confirm funds have the ability to refund excess non-concessional contributions under the proposed new rules handed down in the federal budget last month, according to a superannuation commentator.
“One of the main issues is whether or not you actually need a specific power within the trust deed itself to enable the refund to take place and also the refund of the earnings,” Super Central superannuation consultant Tony Negline told attendees at last week’s Bacon Super and Eggs seminar.
“That is an important point and one that you will all at some point in time have to consider – whether or not your trust deeds allow for the refund mechanism for excess non-concessional contributions.”
In reference to the refund mechanism itself, Negline said he did not agree with some industry commentators’ views that calculating the earnings associated with excess non-concessional contributions would be problematic and quite possibly impossible to implement.
“You know when the contribution was made, you know the earnings that have been made in the interim period, I’m not entirely sure what the issue is to be honest,” he said.
On a positive note, he said he did not think the temporary budget repair levy would apply to either excess non-concessional contributions or lump sum superannuation payments.
“We don’t know the position on excess non-concessional contributions at this point in time. We will have to wait and see,” he said.
“At this point in time it seems to have escaped the net as have lump sums paid out of superannuation funds.
“They pay, obviously, flat tax rates plus the Medicare levy, but the temporary budget repair levy seems to have escaped the net.”
