ATO authority a must for excess NCC refunds

Clients must ensure they have obtained a release authority from the ATO as any excess non-concessional contribution (NCC) amounts cannot be refunded without one, a superannuation technical services manager has said.

“What happens if trustees realise they’ve made a mistake, and again they might have read in their local papers that you can now release money [and decide to do so]? That is illegal early access [if done without a release authority],” Australian Executor Trustees technical services manager Julie Steed said.

Steed added individuals would be unwise to rely on regulator leniency in that situation.

“While at this point in time we haven’t seen the commissioner come down really hard on people, by next year I have no doubt he will,” she said.

“So it is absolutely essential that trustees do not take money out until they’ve got that release authority.”

Advisers are able to implement a strategy to help alleviate the angst and tax liability SMSF trustees might experience when they had realised their NCC cap had been breached, Steed explained.

“One thing that we can do if we know clients have got excess non-concessional [contributions], the most helpful thing we can do, is to encourage them to lodge their personal tax return and their annual member contribution statement from the super fund as early as possible,” she said.

“That allows the amount to be released as quickly as possible and also reduces the amount of associated earnings.

“It’s absolutely important that we understand clients understand that.”

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