What is the process for electing to withdraw the excess contributions?
The process for withdrawing the excess contributions is somewhat convoluted but it needs to be followed precisely to ensure that there are no inadvertent breaches of the act.
- Your Superannuation fund lodges its tax return for the relevant tax year (20XX) in the 20X+ financial year.
- The ATO uses the data in the tax return to identify that a member has exceeded the concessional contribution cap.
- The ATO sends the member a letter ,either personally or to their personal accountant, identifying the excess contributions at this stage the member can either:
- Elect to pay the additional taxes personally (in which case follow the directions on the form).
- Elect to have the money released from super by completing the appropriate form and returning it to the ATO (available through MyGov or your personal accountant). It is important that no money is released from the superannuation fund at this step.
- The completed form is processed by the ATO and a release authority is issued to the superannuation fund.
- Once the release authority is received the superannuation fund must release the money to the ATO within 21 days (as per the instructions on the release) and a form documenting the release must be returned to the ATO.
- The ATO will process the release, deduct any additional taxes (above the 15% already paid by the SMSF) and release any residual amount back to the member as though it were a personal tax refund.