Is something funny happening on MyGov for those with large contributions before 1 July 2017?
In short, yes.
The ATO has done a lot of work to ensure that their MyGov application provides relevant and timely information to all taxpayers about their superannuation. In particular, MyGov helps identify when someone making large contributions has exceeded their contribution cap and potentially has tax to pay.
Unfortunately it looks like there is a glitch that causes incorrect information to be shown for people who made large non-concessional contributions in the 2015/16 or 2016/17 financial years.
Back then, remember that the limit on non-concessional contributions was $180,000 pa or up to $540,000 for those who used the “bring forward” provisions. That continued right up until 1 July 2017.
One group of clients we have already identified as being shown confusing information on MyGov are those who:
- Used this opportunity to make large non-concessional contributions in the 2015/16 financial year – let’s say $530,000 (perfectly acceptable at the time);
- Therefore had up to $10,000 further that could be contributed ($540,000 less $530,000) over their three year bring forward period (1 July 2015 – 30 June 2018);
- If they had contributed this amount in the 2016/17 financial year, there would be no excess – doing so was within the limits up until midnight on 30 June 2017;
- If they didn’t do so, though, their three year limit was instantly reduced from $540,000 to $460,000 on 1 July 2017 (even less if they had more than $1.6m in superannuation at the time);
- Today, then, they are in the funny position of having exceeded their current limit BUT the law is smart enough to recognise that they did so at a time when the limit was higher – so there are no tax consequences;
- Unfortunately, MyGov is missing the bit about there being no consequences! It is correctly flagging that the limit has been exceeded but is then creating panic by stating that “You have exceeded the bring forward cap and will need to pay extra tax at your marginal tax rate or higher.” (emphasis added)
We’ve notified the ATO and understand that MyGov will be fixed before the end of the year.