Posted in: Legislation
On 24 June 2021, the Australian government introduced the Treasury Laws Amendment (2021 Measures No. 5) Bill 2021 into parliament. The amendments within this bill are generally made to improve the various treasury laws so they operate as intended.
The latest amendments clarify that an excess fee cap amount paid by a superannuation fund trustee into a member’s account is not a concessional contribution and the amount refunded does not count towards the member’s concessional contributions cap.
This amendment applies from 1 July 2021.
A superannuation fund trustee is restricted in the amount of fees and costs they can deduct from a member’s account where the account has a balance of less than $6,000. These fees are capped at 3% of the member’s account balance. If the trustees exceed this maximum fee cap, they must refund the amount in excess of the fee cap within three months after the end of the relevant year.
However, the Income Tax Assessment Act 1997 is unclear as to whether an amount refunded within three months after the end of the relevant year is considered a concessional contribution.
The amendments included in the Treasury Laws Amendment (2021 Measures No. 5) Bill 2021 clarify that where a member’s account is a low balance account containing less than $6,000, and the total fees and costs deducted by the superannuation fund trustees exceed the maximum amount that trustees are allowed to deduct, the amount refunded within three months after the end of the relevant applicable year is not a concessional contribution and does not count towards the member’s concessional contributions cap.
Note: The Treasury Laws Amendment (2021 Measures No. 5) Bill 2021 is currently before the parliament and the measures within the bill do not become law until it receives royal assent.
Paragraph 291.25.01(2)(e) of the Income Tax Assessment (1997 Act) Regulations 2021 currently says that amounts refunded within the three-month time frame are not considered to be concessional contributions.
Sources for more information
Treasury Laws Amendment (2021 Measures No. 5) Bill 2021: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6742
Income Tax Assessment Act 1997 – Section 291.25: https://www.ato.gov.au/law/view/document?docid=PAC/19970038/291-25
Superannuation Industry (Supervision) Act 1993 – Section 99G: https://www.ato.gov.au/law/view/document?docid=PAC/19930078/99G
Income Tax Assessment (1997 Act) Regulations 2021 – Regulation 291.25.01: https://www.ato.gov.au/law/view/document?docid=REG/20210206/291-25.01
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