On 27.11.18 the ATO posted an article saying it has begun issuing determinations for excess concessional contributions (ECC) for the 2017-18 financial year.
- The ATO said it will be issuing a higher volume of ECC determinations for 2017-18, following the reduction in the concessional contributions cap to $25,000 for all taxpayers.
- Taxpayers who receive an ECC determination should also expect an amended assessment as excess concessional contributions are automatically included in the individual’s assessable income (and subject to a 15% tax offset).
- An ECC Charge is also payable to take account of the deferred payment of tax.
- Individuals then have 60 days to elect to release up to 85% of their ECCs from their super fund to the ATO as a “credit” to cover the additional personal tax liability. Once made, the election cannot be revoked.
- Therefore, a taxpayer should first ensure that their super fund has correctly reported their contributions to the ATO before making an election.
The ATO said tax practitioners and super funds should prepare for increased calls from clients, and funds should anticipate the receipt of release authorities to be actioned.
From 1 July 2018, the ATO issues release authorities directly to the taxpayer’s super fund. The fund must then pay the amount to the ATO within 20 business days (temporarily extended from 10 business days).
Determinations for taxpayers with a constitutionally protected fund or defined benefit fund will issue at a later time.
Likewise, determinations for excess non-concessional contributions and assessments for Division 293 tax will begin issuing throughout December 2018 (see related Tax Technical article).
CPD questions (answers available)
- A concessional contribution, will be ‘excess’ if it is over what annual cap, in the 2017-18 year?
- What happens to the ‘excess’ amount?
- How can the extra tax the contributor has to pay, be funded?
- How long does the fund currently have, to pay that money, to the ATO, after the member authorises the release?
- Is there a precaution members could take, before accepting an ‘excess concessional contributions determination’ as correct (and making arrangements to pay the extra tax)?