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APRA funds expected to see spike in ENCC release authorities
APRA-regulated funds have been told to expect higher amounts of release authorities for excess non-concessional contributions over the coming months due to previous delays with the ATO’s systems.
In an online update, the ATO stated that due to unavoidable delays caused by improvements to its systems, it is about to start issuing requests to release excess contributions and other charges for clients who did not make an election on the tax treatment of their excess non-concessional contributions (ENCC) for prior financial years.
“This may result in a higher than normal number of release authorities for your members over the coming months while we work through the backlog,” the ATO warned.
“We apologise for any inconvenience. We are issuing these release authorities across the next few months to minimise the impact on funds.”
The ATO explained that superannuation funds receive excess concessional contributions release authorities when one of its members has exceeded their concessional contributions cap in 2013-14 and later financial years and elects to release up to 85 per cent of the excess concessional contributions.
The full amount of excess contributions is included in the member’s taxable income, assessed at the individual’s marginal rate of tax, and a 15 per cent tax offset will be applied.
Amounts of excess concessional contributions that are not released will be treated as non-concessional contributions.
The released amount must be paid directly to the ATO and is to be treated as a non-assessable, non-exempt benefit payment to the member, said the ATO.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
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