The Federal Government has released a consultation paper to the superannuation industry outlining how they propose to refund ‘excess’ contributions to fund members who breach their concessional contribution caps. It is disappointing to see that this consultation package does not consider a review of the existing caps, however it does indicates that the Government will introduce a new contribution cap from 1 July 2012 for those aged over 50. This will of course be subject to separate legislation.

Excess contributions refund

In short the Government is proposing that in terms of the refund of excess concessional contributions:

* The refund option will be offered to an individual who has excess contributions of $10,000 or less in a particular year and only for the first year the cap is breached (commencing for the 30 June 2012 year). It is proposed that the ATO will advise individuals if they are eligible for the refund option.

* Only the first eligible breach is refundable, and if a member does not exercise the refund option when first offered (within the timeframe specified), they are no longer eligible in future years.

* If the refund is approved the excess contributions will be treated as assessable income for the financial year in which the contributions were made. In order for the ATO to approve the refund, fund members must have lodged an income tax return for the relevant year.

* The refund of excess contributions however will be made by trustees to the ATO (rather than the member) who will be responsible for adjusting the individual’s income tax return to provide for the change. Any refund of money to an individual will therefore be made by the ATO.

* If an individual exceeds the contributions caps due to special circumstances they can apply to the ATO to have all or part of the contribution disregarded or allocated to another financial year. The paper provides no detail about what such ‘special circumstances’ might be or how such discretion would be exercised by the ATO.

Members should be aware that the proposed data provided by Trustees to the ATO to enable them to make assessments for excess contribution refunds is usually provided to the ATO in late October each year. It takes the ATO some months to process this data (for all super funds) and it is expected that there therefore will be considerable time lag between the end of the financial year and any consequent ‘refund’ of contributions in an individuals tax assessment.

It is important to note that this proposal in at the consultation stage and draft legislation is not yet available for us to review and may in any event be subject to change as a result of this consultation. AvSuper will keep you informed as the matter progresses and we will continue to represent our members’ interests by ensuring your concerns and queries are submitted to the Government, including via industry associations such as the Australian Super Funds of Australia (ASFA).

A copy of the Government’s consultation paper can be found on the Treasury website.

If you have any questions about your contribution caps, or your super in general, please contact us on 1800 805 088 or via email.


Michelle Griffiths
CEO, AvSuper

Phone 1300 128 751 (Local call)