Treasury exposure draft legislation released on 10 October gives effect to the Budget measure that allows individuals to withdraw superannuation contributions made in excess of the non-concessional contributions cap, as well as the earnings on these contributions, in order to avoid excess contributions tax. Key details of the proposal include:

• Application to excess non-concessional contributions made in the 2013/14 financial year and later years.
• The member can elect to have the excess amount, together with any associated earnings, released from the fund. The earnings will be calculated from 1 July of the financial year of contribution up until the day the Commissioner makes his determination.
• The payment (refund) from the fund will be treated as a lump sum super payment and will be non-assessable non-exempt (NANE) income. However, the associated earnings component of the payment would be included in the individual’s assessable income.
• The earnings will be calculated using an average of the General Interest Charge (GIC) rate for each quarter of the financial year. The interest will compound on a daily basis. For the FY2014 year, the rate would average out to be 9.66%.
• Where the excess contributions are released from the fund, excess non-concessional contributions tax will not be imposed.
• If only part of the excess contributions are released then excess contributions tax will apply to the balance remaining in the fund(s).
• Excess non-concessional contributions tax will also not be imposed where the member’s remaining superannuation interest is nil – for instance where the member has withdrawn all their super benefits. However, the full amount of the associated earnings will still be included as assessable income for the individual.
• Excess non-concessional contributions tax will be imposed on amounts that are not released from the fund.
• The current method for working out non-concessional contribution caps will still apply.
• The Commissioner will still have the discretion to disregard or re-allocate non-concessional contributions, and excess contributions tax will not be imposed on amounts that are disregarded.