Technically Speaking: Dealing with excess non-concessional contributions

It is not uncommon for a fund member to exceed their Non-concessional contribution cap. And, it can be a daunting experience when a member receives an Excess Non-concessional contribution determination from the ATO. For those who are less familiar with the process that follows, it might lead to a state of confusion as members and their trusted advisers seek to navigate their way through the various options before making an election.

In this bulletin we take a closer look at the operation of the excess contributions tax regime where a client breaches their non-concessional contribution (NCC) cap by exploring the available options. Through reading this bulletin you will have a better understanding of:

  • the Excess NCC determination
  • the process and timeframes for making an election
  • the different tax outcomes – based on the choice that is made
  • what happens if a member has already died
  • the impacts to tax components and preservation status of a member’s benefits
  • some additional practical considerations

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The contents of this resource are taken to be correct at the time of publication.

Disclaimer: Technical Papers contain factual information only and are prepared without considering particular objectives, financial circumstances and needs. The information provided is not a substitute for legal, tax and financial product advice. The information contained in this document does not constitute advice given by the SMSF Association to you. If you rely on this information yourself or to provide advice to other persons, then you do so at your own risk. The SMSF Association is not licensed to provide financial product advice, legal advice or taxation advice. We recommend that you seek appropriate professional advice before relying upon the information in this technical paper. While the SMSF Association believes that the information provided is accurate, no warranty is given as to its accuracy and persons who rely on this information do so at their own risk. The information provided in this paper is not considered financial advice for the purposes of the Corporations Act 2001. © SMSF Association