The government is unlikely to lift the superannuation contributions caps back to their previous levels in the May budget, despite calls for change from many quarters of the industry, according to ING national technical manager Graeme Colley.
"Because of my role with SPAA (Self-Managed Super Fund Professionals' Association of Australia) we were talking with the minister's [for superannuation] office and it seems unlikely that these contributions caps will be increased," Colley said.
"The reason why they are saying that is the expense of superannuation to the budget bottom line is quite huge. It's the largest item of expenditure that the government has got for any deductions," he said.
On a more positive note, a recent taxpayer alert has served as a reminder that some relief exists for individuals in regard to the contributions caps for certain errors.
Under this rule, super fund trustees can refund excess contributions as long as it was a result of a genuine mistake as defined by the Australian Taxation Office (ATO).
However, the definition of a genuine mistake is quite narrow.
"These have got to be situations where you intended to do something and things have gone wrong through no fault of your own that has resulted in too much money going into the fund," Colley said.
The ATO has provided some examples of what it would consider as a genuine mistake, including situations like making foreign currency contributions into a fund and being caught out by foreign exchange movements that made the contribution larger than anticipated.
However, the ATO does not consider ignorance of the law as a genuine mistake, Colley said.
