ASFA has released its submission on the Exposure Draft – Income Tax Assessment and Other Legislation (Sustaining the Superannuation Contribution Concession) Amendment Regulation 2013 released on 31 May 2013.
The draft regulations will complement the proposed measures in the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 that will impose an additional 15% Division 293 tax on the “low tax contributions” (essentially concessional contributions, as modified by special rules) of taxpayers above the “high income threshold” of $300,000 from 2012-13.
ASFA notes that the draft regulations are based loosely on those which operated under the former Superannuation Contributions Surcharge regime (which was abolished from 1 July 2005). ASFA has raised concerns that the draft regulations have rejected the industry recommendation that the method for determining defined benefit contributions should modelled on the existing calculation of notional taxed contributions (NTC). ASFA called on the Government not to proceed with the method proposed in the draft regs and instead use the current NTC method, with an adjustment to exclude the grandfathering provision.
ASFA considers that the draft regs are deficient and their successful implementation will require the timely release of extensive interpretative material from the Tax Office and a guidance note from the Actuaries Institute. ASFA said that funds will be unable to meet their member contribution statement (MCS) reporting deadline with respect to this information, which could lead to penalties for funds. ASFA also noted that the implementation costs will be borne by all members of a defined benefit fund even though the Div 293 tax will be incurred by a limited number of members.
[LTN 110, 11/6/13]