Did your member exceed their non-concessional contribution cap?
The ATO is advising that if a an SMSF member has received an excess non-concessional contributions (ENCC) determination, they need to obtain a release authority to be actioned within 10 business days.
It has also warned advisers must not release any amount to members directly.
“There are limits on how much your members can pay into their super each financial year without having to pay extra tax. These limits are called contribution caps which can change depending on your members’ age and total super balance,” the ATO said.
“We assess your members’ contributions when we have contributions information and your member lodges their tax return for the same financial year. If your member exceeds their non-concessional contributions cap, we will send them an ENCC determination.”
The ATO stated if a member receives this ENCC determination, they can elect to release their excess non-concessional contributions, as well as 85 per cent of the associated earnings, from their super fund.
If the member chooses this option, or the ATO does not hear from that member, it will send a release authority that must be actioned within 10 business days of the issue date and pay the amounts directly to the ATO.
It will then offset the balance against any outstanding tax or debts. If there is an amount remaining, it will pay it to your member.
If funds are released prior to receiving a release authority, a contravention will occur and the member may be liable for penalties. In this event it is advised to consider submitting a voluntary disclosure form.
