The excess super contributions sting

As we near 30th June, clients should take care to ensure they do not exceed their $25,000 maximum super contribution limit for 2013. A bit of good news on this front is that this week saw the introduction of legislation into the Federal Parliament to reduce the penalty rate of tax imposed where superannuation contributions have exceeded the maximum allowed. Under the present rules, if you exceed the maximum, the excess will be taxed at a total rate of 46.5%, although there is some grace if you make a mistake – once-of up to $10,000. Under the proposed new rules (which will come into effect from 1/7/13), the excess will be taxed at the member’s marginal rate (plus an interest charge). This is a much fairer system. The old system sometimes saw members slugged tax at a rate of 93%!

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