The Institute of Chartered Accountants in Australia (ICAA) has expressed concerns over the rising number of excess contributions tax (ECT) assessments, stating the aim of the tax as a deterrent has so far been unsuccessful.
The Australian Taxation Office (ATO) updated its figures over the weekend, showing that during the 2010 financial year, 45,330 excess concessional contributions assessments were issued, a sharp increase on the 15,315 recorded in 2008/09 and the 18,068 in 2007/08.
The total value of the assessments was $130.9 million, compared to $58.4 million the year before, the figures showed.
ICAA head of superannuation Liz Westover said the rise was partly due to the complexity of the rules and their ineffectiveness in curbing excess contributions.
"When concessional contributions were introduced and ECT assessments started being issued, the government and regulators believed that the number of assessments would fall as people became aware of the new rules," Westover said.
"The latest figures indicate that this is clearly not the case. ECT was originally introduced simply as a deterrent to people breaching super contribution caps, not a revenue raiser.
"With the complexity surrounding the caps and the rules around super, it is clear that people are still getting it wrong, and the number of inadvertent errors continues to rise."
The ATO indicated the 2009/10 figures were still not complete and would change as more information was received.
"I am concerned that the 2010/11 figures will be even greater," Westover said.
However, self-managed super fund specialist Cavendish Superannuation said the sharp increase was expected, because the government halved the concessional contribution caps in 2009/10.
"There is an inevitable period of adjustment," Cavendish head of education and manager for New South Wales David Busoli said yesterday.
Busoli also pointed out that although the total value of the assessments had gone up, the average value had not changed dramatically, increasing only from $1618 in 2008/09 to $1821 in 2009/10.
On the other hand, the number of excess non-concessional contributions fell dramatically from 1550 in 2008/09 to six in 2009/10.
"Though these numbers are cause for optimism, I would expect that they will not look as favourable once the full impact of assessment activity for this period has been completed," Busoli said.
"The 2010/11 statistics are too preliminary to be given any significance at this stage."
