The Board has received the following suggestion during the course of its consultations.
The current provisions around excess superannuation tax are bureaucratic and cumbersome especially for non-executive directors with the decision to include death and disability insurance in the superannuation contributions cap.
Many persons will inevitably be in breach of the cap, especially those receiving multiple group certificates. For a 60 year old, death and disability premiums may be 20-25,000 themselves. They will receive an amended assessment 2 years after the event requiring them to transfer funds out of the fund, together with an earnings adjustment plus penalty.
The ATO assessments have a very high error rate and result in considerable cost and professional fees to comply.
Surely a system could be introduced to cash out the superannuation guarantee obligations by a single adjustment notice where the recipient knows that they will be over the limit.
The Board is interested in getting the thoughts of the Sounding Board community on this issue. Do people share a similar concern? Do people have an example that they could share where they may be in breach of the cap?