At the height of the Global Financial Crisis (GFC) we were continually reminded by Politicians and Economists alike that the Australian economy was in good shape, our banking sector was sound and demand for resources would continue. However our local sharemarket followed Wall Street into a downward spiral. This further strengthened the argument that “When the US sneezes, Australia catches a cold”.
The excess superannuation contributions tax penalty is a savage and unjust impost levied on Australian taxpayers who are doing no more than trying to maximise their retirement savings. The notion that around 35,000 Australians “deliberately” made excessive contributions to their superannuation funds in 2009 is absurd. Clearly, due to the complexity of the superannuation contributions caps regime, it is very easy to make a mistake and inadvertently make a contribution that exceeds the regulated caps. But rather than simply disallowing the contribution and returning any excess to the member, the Australian Tax Office (ATO) applies penalties from 46.5% to as high as 93%!
Over the next two decades almost $70 billion of intergenerational wealth will change hands in Australia, but many will lose out due to lack of planning and low levels of understanding of the rules governing superannuation and death taxes – a complex area of super that’s not often publicised.