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Fix excess contributions tax say accountants
The Federal Government has been urged to use the May Federal Budget to revisit and fix the issue of excess contributions tax.
The Institute of Chartered Accountants in Australia (ICAA) has used its pre-Budget submission to urge the Government to reconsider the legislation for refunds of up to $10,000 in excess contributions, and to implement a full refund of excess contributions regardless of amount, timing or frequency.
"While we appreciate that the current refund proposal was intended to provide some relief to the excess contributions tax, this new legislation is complicated, and too restrictive to be of real value to Australians saving for retirement, and in practical terms does not always meet the policy objectives," the ICAA submission said.
The submission said the penalty for making contributions beyond the contributions caps was "excessive, unwarranted and inconsistent not only with the policy objective, but with penalties for breaches in other areas of tax law".
"Changes are required to ensure that a fairer system is in place and will remain consistent with the government's policy objective to encourage saving for retirement," it said.
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