T H E L E A D I N G I N D E P E N D E N T J O U R N A L FO R T H E S U P E R A N N U AT I O N A N D I N S T I T U T I O N A L F U N D S M A N A G E M E N T I N D U S T RY FEBRUARY 2012
Volume 26 - Issue 1
Pressure for further ECT fix 6 SOCIAL MEDIA How to make social media work for your organisation
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ISSN 1324-5295
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The Government has found itself under pressure to deliver a better excess contributions tax in the May Budget, amid concerns its existing approach denies the ATO enough discretion.
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NEWS
barrier and disincentive for people to save for their retirement. “The consequences of the ECT are exacerbated by the lowering of the contributions caps,” SPAA chief executive, Andrea Slattery said. She said SPAA would be urging the Government to give the Tax Commissioner greater discretion to deal with inadvertent breach scenarios. At the same time, the Institute of Chartered Accountants in Australia (ICAA) has not only supported greater discretionary powers for the Tax Commissioner around inadvertent ECT breaches, but has questioned the current arrangements with respect to allowing the ATO to access ECT refund amounts. It said the arrangements flowing from the last Federal Budget could see the ATO allowed to have inappropriate ‘first dibs’ on refund amounts. The ICAA’s superannuation specialist Liz Westover said she was disturbed by the refund process applying to the $10,000 available with respect to excess contributions, under which the Commissioner will deduct from the refund any tax that the individual might owe following
he Federal Government is being placed under increasing pressure to use the May Budget to provide a better solution to an excess contributions tax (ECT) regime. Amid widespread industry disappointment at the Government’s efforts to address the ECT regime in the 2011 Budget, key bodies are pointing to administrative shortcomings in the new arrangements, as well as the perceived inequity of limiting excess contribution refunds to just $10,000. The 2011 Budget fix with respect to the ECT fell well short of broad industry expectations, and has made the issue a focal point for a number of pre-Budget submissions. A number of industry commentators have also pointed to the fact that the Australian Taxation ofice (ATO) has indicated its own misgivings about the operation of the existing ECT regime and the lack of discretion available to the Tax Commissioner. The Self-Managed Super Fund Professionals’ Association of Australia (SPAA) early this month pointed to what it described as the continuing “harshness” of the excess contributions regime. It said it represented a major 3
PRODUCT RATINGS
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EDITORIAL
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Andrea Slattery
“The provision of some relief should not include a debt collection medium for the Government.” - Liz Westover the contribution being reassessed as income to the individual. She said that while this might seem fair enough, a catch existed. “The Commissioner can also deduct any other tax liabilities owing to the tax office, and also any other payments owing by the individual to other government agencies,” Westover said. She said that while current tax laws may permit the Commissioner to do this as the re-
STRESSING TESTS
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fund is made by virtue of a tax law, “it doesn’t seem quite fair for the Government to have ‘first dibs’ on any refunded amounts”. “This approach is inconsistent with the provision of relief,” Westover said. She said it had to be remembered that the majority of excess contributions were mistakes. “The provision of some relief should not include a debt collection medium for the Government,” Westover said. SR 17
ROLLOVER
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