As the end of the financial year looms, now is a great time for members of super funds to arrange to claim back any 'no TFN tax' paid on their contributions.Paul Ellis
A member of a super fund pays the 'no TFN tax' if:
Members are not compelled to provide their TFN to their super fund, but the 'no TFN tax' is a clear incentive to do so.
The types of contributions taxed include:
A member's own post-tax contributions are not taxed for the 'no TFN tax' because the member's TFN must have been provided to the fund for post-tax contributions to be made.
If after a fund accepts a member's post-tax contribution the fund realises that it does not have the member's TFN, then within 30 days either:
The recent economic downturn makes now a great time to claim back 'no TFN tax'.
Curiously, claiming back the tax will put many members' funds in a better position than if they hadn't paid the tax. It's a simple calculation: members will receive the 'no TFN tax' back from the ATO dollar for dollar (that is, a 0% return). In recent years, a 0% return would have been a poor result. But in the last 18 months, it is likely to be a better performance than that of the rest of their fund.
A fund has a three year window during which it can apply to claim back the no TFN tax. This is further discussed below.
Two types of claims can be made for 'no TFN tax':
A super fund's claims for the 'No TFN tax offset' must be made within three years of the end of the income year in which the 'no TFN tax contributions' were made.
A member's claim for interest on any 'no TFN tax' can be made any time. There is no time limit.
If an employer receives the TFN details from a member, the employer is obliged to tell the employee's TFN to the member's super fund.
As has been discussed above, if the employer does not tell the super fund, then the member's super contributions will be taxed at far higher rates than might otherwise be the case.
Both employers, and employees, need to be vigilant on this issue.
For questions or more information about the above article, please call Maddocks in Melbourne (03 9288 0555) and ask for a member of the Maddocks Superannuation Team.
Paul is a Special Counsel in the Maddocks Commercial team with particular expertise in commercial agreements for the supply of goods and/or services, the Personal Property Securities Act 2009, the National Consumer Credit Protection Act 2009 and the National Credit Code and the Australian Consumer Law.
Paul's key areas of practice include:
Before joining Maddocks, Paul was employed for 13 years with the Victorian Department of Justice, principally as a Deputy Registrar in the Victorian Magistrate's Court, but also as a legislation, policy and project officer for the Department.
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For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.