“This is a new detail that has emerged,” he said.

“We knew when Treasury introduced the Division 296 tax that we would have to work out earnings that were to be taxed, and one of the calculations is that you add back withdrawals that have been used in the current financial year.

“This includes amounts that are being released under release authorities of which one is non-concessional contributions.”

Mr Miller said the ATO calculates the amount from 1 July each year a member exceeds their NCCs and applies a marginal tax rate on them.

He said the draft exposure alludes to the fact that including these associated earnings as a withdrawal to be added back to the adjusted total super balance is similar to applying a double tax.

However, he said, Treasury has stipulated that it is excluding a similar calculation for people who have accessed the First Home Super Scheme.

He said the new Division 296 defines “your withdrawal totals” at Section 296-50 to include, “the amount of a payment made during the year by a superannuation provide from a superannuation interest of yours in relation to a release authority issued under Division 131 or 135 in Schedule 1 to the Taxation Administration Act 1953, other than a release authority that relates to a first home super saver (FHSS) determination”.

“For those with an FHSS release authority, there is a formula that has been put in place to preserve the tax concessions for the associated earnings calculated under the scheme, meaning that the amount added back in as a withdrawal excludes the earnings,” he added.

“So, the question is, why has there not been a similar measure introduced for the associated earnings attributable to excess NCCs?”

He continued that it can be assumed that people with a super balance in excess of $3 million would most likely already have a first home, and not access the FHSS.

He added that the concept of releasing 85 per cent of the associated earnings for excess NCCs was based on the premise that those earnings should have been made outside of superannuation and therefore they are going to be treated as such and taxed accordingly.

“Given that this new measure has been introduced to reduce tax concessions for certain individuals, it’s unnecessary to include it in existing measures that already reduce tax concessions,” he said.

“It’s just another element that highlights the inequity of basing earnings on an unrealised member balance.”