Superannuation - Option to withdraw excess non-concessional contributions

05 Jun 14

The Government will allow individual the option of withdrawing superannuation contributions in excess of the non-concessional contributions cap made from 1 July 2013 and any associated earnings, with these earnings to instead be taxed at the individual's marginal tax rate. The measure will seek to provide a process to addresses all inadvertent breaches of the superannuation contribution caps where the error would result in a disproportionate tax penalty.

Currently, superannuation contributions that exceed the non-concessional contributions cap are taxed at 46.5%
Non-Concessional contributions include contributions which are not included in the assessable income of the receiving superannuation fund, e.g. non-deductible personal contributions made from the member's after-tax income.  The annual non-concessional contributions cap is currently $150,000 - rising to $180,000 from 2014-15.
The bring-forward rule currently allows a one-off non-concessional contribution up to $450,000 over 3 years, or $540,000 over 3 years from 2014-2015

For any excess non-concessional contributions made after 1 July 2013, the Government will allow individuals to withdraw those excess contributions and associated earnings. If an individual chooses this option, no excess contributions tax will be payable and any related earnings will be taxed at the individual's marginal tax rate.
Individual who leave theirs excess non-concessional contributions in their suiperannuation fund will continue to be taxed on these contributions at the top marginal tax rate.

Non-concessional contributions in excess of a person's cap are currently taxed at 46.5% (47% from 1 July 2014).