Changes to how super excess concessional contributions are taxed

Excess superannuation concessional contributions made from 1 July 2013 are included in an individual’s assessable income and taxed at their marginal tax rate. As part of the assessment process taxpayers will receive a non-refundable tax offset of 15% of their excess concessional contributions along with an additional excess concessional contribution (“ECC”) charge.

To assist payment of the additional tax and charge, individuals can request up to 85% of their excess concessional contributions to be released from their superannuation fund. When released from the fund, it is not counted as non-concessional contributions.

For the 2011-12 and 2012-13 financial years only, individuals with excess concessional contributions of $10,000 or less may receive a once only offer to refund their excess concessional contributions. If refunded, the amount is still assessed at their marginal tax rate rather than pay excess contributions tax.


Excess concessional contribution (ECC) charge

The excess concessional contributions (ECC) charge is applied to concessional contributions in excess of the cap, to recognise that the tax is collected later than normal income tax. The charge is payable on the increase in tax liability in the year a person makes excess concessional
contributions. This applies from the 2013-14 income year and onwards.

The relevant period is calculated from the start of the income year in which the excess concessional contributions were made. It ends just before the tax is due to be paid under your first income tax assessment for the year that includes the excess concessional contributions. The formula for calculating the ECC charge uses a base interest rate for the day plus an uplift factor of 3%. The base interest rate is the monthly average yield of 90-day Bank Accepted Bills published by the Reserve Bank of Australia.

The ECC charge rates are updated quarterly and listed in the table below.

Quarter                               

Annual Rate    

Daily Rate 

October - December 2013 

               5.6% 

         0.01534246% 

July - September 2013    

               5.82% 

        0.01594520%