Release of excess concessional contributions
4.5 Release of excess concessional contributions
If a member has excess concessional contributions for the financial year, the Commissioner must make a written determination stating the amount of the excess contributions and the amount of excess concessional contributions charge the member is liable to pay.
The determination received by the member may request the release from a superannuation interest up to 85% of the excess concessional contribution. There is an 85% cap because the remaining 15% represents the income tax liability that the fund incurred when it received the contributions. The choice of how much to release, up to the 85%, is at the discretion of the member.
The request to the release the amount must generally be made by the individual within 60 days of receiving the notice, or within a further period allowed by the Commissioner.
Once the request is received by the Commissioner, the Commissioner must provide a release authority for the specified amount to each superannuation provider that holds a superannuation interest identified in the election. The superannuation provider will have 10 business days from the date of issue of the release authority to release the amount to the Commissioner.
A superannuation fund that has been issued with a release authority must pay the Commissioner the lesser of:
- the amount state in the release authority, and
- the sum of the 'maximum available release amounts' for each superannuation interests held for the member by a superannuation provider
The 'maximum available release amount' for a superannuation interest at a particular time is any superannuation benefits held in both accumulation accounts and superannuation income streams but the calculation does not include an interest that is a defined benefit interest.
Notifying the Commissioner
When a superannuation provider receives a release authority must generally pay and notify the Commissioner within 10 business days after the date the release authority is issued. A superannuation provider that fails to notify the Commissioner as required is liable to an administrative penalty.
Consequences of releasing amounts
Any amounts release to the Commissioner due to a release authority will generally be credited against a member's tax liability with excess amounts refunded to the individual. Any amounts relating to Division 293 tax liability that is deferred to a Division 293 debt account are treated as a voluntary payment towards the debt account.
This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.
Last modified: Wednesday, June 28, 2023