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Administration of excess contributions

Administration of excess concessional contributions

Section: 17.3

The ATO will notify the member of the amount of their excess concessional contributions (which form part of their assessable income) and associated excess concessional
contributions charge via an excess concessional contributions determination.

Electing to release excess concessional contributions

Members may elect to have up to 85% of any excess concessional contributions made from 1 July 2013 released from their super fund. This may be necessary, for example, to allow the member to have enough funds available to pay income tax on their excess concessional contributions.

A member must make such an election to the ATO in the approved form within 21 days of receiving an excess concessional contributions determination (or where an
amended determination has been issued, within 21 days of receiving the amended determination). Once made, a member is not able to revoke an election to release
excess concessional contributions.

Once a member has made an election, the ATO provides a release authority to the member's super fund, which must pay the amount the member has elected to
release to the ATO. The proportioning rule does not apply to a payment made under a release authority.

There are some exceptions where a super fund does not have to comply with a release authority (but may choose to do so), including where the member's super interest is:

  • a defined benefit interest
  • an interest in a non-complying super fund, or
  • an interest that supports a super income stream.

Excess concessional contributions released to the ATO must then be provided as a tax credit to the member. To the extent that the amount released exceeds the member's outstanding tax liabilities, the member is entitled to a refund. It is important to note that excess concessional contributions count toward a member's non-concessional contributions cap. However, where a member elects to release excess concessional contributions from their super fund, their non-concessional contributions for a financial year will be reduced by 100/85 of the amount released.

Disregarding certain excess concessional contributions up to $10,000

Where a member has eligible excess contributions of $10,000 or less for the 2011-12 or 2012-13 financial year and it is the first time the member has exceeded their concessional contributions cap (excluding financial years before 2011-12), they will receive an offer from the ATO to refund their excess contributions. Where a member takes up this offer:

  • the excess contributions are assessable income of the member for the financial year(with a 15% tax offset to allow for tax already paid by the member's super fund), and
  • 85% of the excess concessional contributions are generally refunded from super and provided to the member as a tax credit.

Where a member elects not to take up the offer, excess concessional contributions tax of 31.5% will apply to the excess amount. The excess concessional contribution
amount will also count towards the member's non-concessional contributions cap for the financial year in which the contribution was made.

Last modified: Friday, January 12, 2018