The Board has received the following suggestion during the course of its consultations.
The current provisions around excess superannuation tax are bureaucratic and cumbersome especially for non-executive directors with the decision to include death and disability insurance in the superannuation contributions cap.
Many persons will inevitably be in breach of the cap, especially those receiving multiple group certificates. For a 60 year old, death and disability premiums may be 20-25,000 themselves. They will receive an amended assessment 2 years after the event requiring them to transfer funds out of the fund, together with an earnings adjustment plus penalty.
The ATO assessments have a very high error rate and result in considerable cost and professional fees to comply.
Surely a system could be introduced to cash out the superannuation guarantee obligations by a single adjustment notice where the recipient knows that they will be over the limit.
The Board is interested in getting the thoughts of the Sounding Board community on this issue. Do people share a similar concern? Do people have an example that they could share where they may be in breach of the cap?
The Board has investigated this matter and is aware that a measure was announced in the 2018-19 Budget to address some of these Superannuation Guarantee (SG) concerns.
The Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 was passed by the House of Representatives on 20 June 2018 (first introduced 24 May 2018) and is currently awaiting consideration by the Senate (first introduced on 25 June 2018).
This bill can be found at: https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r6126
The Board is interested to understand if these amendments are sufficient and should they be a legislative priority for Parliament. Your views on this would be useful evidence of the need for reform.
Treasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018 – Parliament of AustraliaTreasury Laws Amendment (2018 Superannuation Measures No. 1) Bill 2018