The Australian Government is to reform what it says is the punitive taxation of excess superannuation contributions.
At present, superannuation contributions that exceed the non-concessional contributions cap are taxed at the top marginal tax rate. The Government says that as the contributions come from income that had previously been taxed, this can take the overall rate up to 93 percent.
The Government has now released details of the changes announced as part of Treasurer Joe Hockey’s first Budget. The aim is to ensure that the treatment of excess concessional and non-concessional contributions is broadly consistent and that inadvertent breaches of the non-concessional contributions cap do not incur a disproportionate penalty.
For any excess contributions made after July 1, 2013, which breach the non-concessional cap, 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. Individuals who leave their excess contributions in the fund will continue to be taxed on these contributions at the top marginal rate.
– See source link at: http://www.tax-news.com/news/Australia_Confirms_Superannuation_Tax_Changes____64700.html