The removal of charges related to excess concessional contributions was not a request from the SMSF sector and may open up strategies that encourage people to intentionally breach the law, a technical expert has claimed.
SuperGuardian education manager Tim Miller said an amendment to the Treasury Laws Amendment (More Flexible Superannuation) Bill 2020, which was put forward by Pauline Hanson’s One Nation party in the Senate prior to its passing, could be misused.
“Everyone will be saying that it’s nice to have the excess concessional contribution charge removed from the 1st of July 2021, but were we crying out for it?” Miller said during a recent webinar.
“I don’t think that as an industry it was a huge issue. It was a reasonable disincentive for people to exceed their concessional contribution cap.
“It is one of those areas where I don’t want us to be an industry where we are promoting strategies to exceed caps to defer taxation liabilities to the ATO. I can see that sort of stuff start coming around from 1 July.”
He added that he felt the amendment’s inclusion in the bill, which will allow people aged 65 and 66 to use the bring-forward rule to make up to three years of non-concessional superannuation contributions, was driven from within the houses of parliament rather than from outside.
“I’m a little bit sceptical about this amendment and feel that if this is the reason that we waited 15 months for the bring-forward rules to come in, then that’s somewhat of a let down,” he said.
“It would be slightly cheeky of me to suggest that one of the things I identified in watching this legislation pass is that many in the Senate chamber pay excess concessional contributions tax charges, and so you know who’s the real winner.”
The bill passed through parliament on 17 June, 13 months after first being introduced into the House of Representatives on 13 May 2020.
The bill moved into the Senate on 31 August 2020 before being revisited nine months later, with the addition of the amendment, in the days preceding its passing.