Increased superannuation release authorities for excess non-concessional contributions (ENCC)

Excess non-concessional contributions and the release process

There are limits on the amount of contributions you can make to your superannuation fund each year. When you exceed your non-concessional (after-tax) contributions cap, the ATO will issue a determination letter which gives you the choice to:

• Elect to release the excess amount and 85% of the associated earnings from super, or
• Elect to not release the excess amount and be assessed for excess non-concessional contribution tax at the highest marginal tax rate plus Medicare levy.

Once you make the election, the ATO will issue a release authority to your super fund with further instructions. From 1 October 2021, there are new streamlined processes for release authorities to be issued to super funds (including SMSFs) electronically via SuperStream.

What to expect and action required

Super funds can expect to receive a high volume of ATO release requests for their members over the coming months as they work through the backlog (noting that the determination letter may have been issued to the member in a prior year and long forgotten!).

Within 10 business days from the date of the release authority, the super fund must arrange for an electronic payment to the ATO and send them a Release Authority Statement (RAS) message advising whether the amount is successfully released to the ATO. For clients with SMSFs, we will assist you in this process.

Should you have any queries about the above, please contact your usual Grant Thornton relationship partner.

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