ATO, Compliance

Trustees warned on excess NCC release

Excess non-concessional release

SMSF trustees have been advised that any excess non-concessional contributions must be released to the ATO and not fund members and not doing so is a compliance breach.

SMSF trustees have been reminded they should not be directing any excess non-concessional contributions (ENCC) to fund members, but release them to the ATO within a set timeframe and any non-compliance with this process will create a contravention.

The ATO released the reminder to SMSF trustees via its website where it stated the contribution caps for superannuation fund members are dependent on a member’s age and total super balance, and that these are monitored by the regulator for compliance with the caps.

“We assess your member’s contributions when we have contributions information and your member lodges their tax return for the same financial year,” the regulator stated.

“If your member exceeds their non-concessional contributions cap, we will send them an ENCC determination.

“If your member receives this ENCC determination, they can elect to release their excess non-concessional contributions, as well as 85 per cent of the associated earnings, from their super fund.”

It noted this process had to be carried out in a particular order and the trustees, not the SMSF member, were required to take action within two working weeks to address the ENCC determination.

“When your member chooses this option [to release the excess contributions], or we do not hear from your member, we will send you a release authority,” it said.

“You must action the release authority within 10 business days of the issue date and pay the amounts directly to us. We will then offset the balance against any outstanding tax or debts. If there is an amount remaining, we will pay it to your member.

“If you release funds prior to receiving a release authority, a contravention will occur and you may be liable for penalties. In this event you should consider submitting a voluntary disclosure form.”

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