The ATO have released a factsheet that sets out the Commissioner's approach in exercising discretion to disregard or reallocate superannuation contributions when an employer makes remedial super guarantee (SG) contributions.

Even though remedial SG contributions may relate to an earlier income year, they are treated as a concessional contribution in the year they are "made" – as a result they may result in an employee exceeding their concessional contributions cap. An employee may apply for an ATO determination to have these remedial SG contributions disregarded or allocated to another year to manage contribution caps. However, the ATO said it does not have the power to exercise this discretion for Div 293 purposes.

In deciding whether to exercise discretion, the ATO says it will consider whether the remedial SG contributions results in "unfair or unintended outcomes", whether the employee had "control" over the circumstances that led to the remedial contributions, and whether it was "reasonably predictable" that the remedial SG contributions would result in excess contributions for an income year.

Further information

Australian Taxation Office, Exercising the Commissioner’s discretion to disregard or reallocate remedial super guarantee contributions, 8 November 2019

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