Did your super fund receive a compensation payment?
Welcome to Smart Private Wealth • Learning Centre • Insights
Welcome to Smart Private Wealth • Learning Centre • Insights
Is a financial services compensation payment to your superannuation fund considered to be a contribution?
Of late, there have been several compensation payments made by financial services providers to customers that were inappropriately charged
or overcharged for insurance premiums or services they did not receive, etc.
New guidance from the ATO helps
decipher whether these compensation payments are treated as contributions to your fund. The problem for some people is that where these
compensation payments are treated as a contribution to their superannuation fund, they may exceed their contribution cap or attract Division
293 tax (a 15% tax on super contributions imposed on those with combined income and super contributions of $250,000 or more).
In general, the treatment of the compensation depends on who engaged the financial services provider:
Where neither the member of the fund or the financial services provider had a right to seek compensation, the amount will be a concessional
contribution in the financial year it is received by the fund.
If you have received a compensation payment from a financial services provider and the payment means you have exceeded your contribution cap, or are liable for Division 293 tax, there is a potential solution to avoid an adverse impact where you did not have control over the payment. In these cases, you can apply to the Tax Commissioner to exercise his discretion to disregard excess contributions or reallocate them to another year.
Get in touch with our team for expert advisory on your superannuation and other financial planning matters.
Going through a divorce or separation is undoubtedly challenging, but it's essential to take control of your financial future. By understanding the impact of separation on your assets, seeking professional advice, and creating a solid financial plan, you can navigate this difficult time with confidence.
The ATO has issued a warning to trustees of SMSFs about sloppy valuation practices.
As conflicts between nations flare into open armed warfare and elections around the world become more contentious, there’s plenty to spike investor concern. We look at how wars and political tensions influence investment markets over the long term and examine the im- plications for your retirement savings.
