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Superannuation: excess contributions tax assessment set aside

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The AAT has decided that an excess contributions tax assessment should be set aside because “special circumstances” existed, ordering that superannuation contributions paid by the taxpayer's employer in early July 2009 be reallocated to the previous financial year.

During the 2009–2010 financial year, the taxpayer's employer made payments on behalf of the taxpayer to two super funds (an AMP fund and a Tasplan fund). There were "salary sacrifice" payments, as well as superannuation guarantee scheme payments, to both AMP and Tasplan. The AMP payments were made in early July 2009, notwithstanding the taxpayer's salary sacrifice agreement that, from 1 July 2009, payments were to be made to Tasplan only. (The taxpayer was dissatisfied with the 4.5% commission charged by AMP and had decided to change funds.)

The contributions exceeded the taxpayer's concessional contributions cap for 2009–2010 (being $50,000, as he was over 50) and he was assessed as being liable to pay excess contributions tax. The taxpayer had genuinely believed his contributions were within the cap and the first he knew of excess contributions having been made was when the ATO advised him 10 months after the end of the 2009–2010 financial year.

The AAT was satisfied that there were "special circumstances" in this case. These included, in particular:

  • that the taxpayer sought to arrange his affairs so that the concessional contributions cap would not be exceeded. The AAT said the employer was required to cease making payments to AMP from 1 July 2009 and it was not reasonably foreseeable that the cap would be exceeded;
  • that the agreed amount of salary sacrifice contributions for 2009–2010 was well within the cap;
  • that the July 2009 payments were made to AMP, which indicated that they were intended for the 2008–2009 financial year; and
  • that the taxpayer relied entirely on the terms of the agreement with his employer and expected the salary sacrifice contributions to be made in a timely manner (ie monthly).

The AAT was satisfied that because the taxpayer had no knowledge of the problem, he had no opportunity to correct the error. The AAT therefore ordered that the AMP payments in early July 2009 be reallocated to the 2008–2009 financial year.

Re Longcake and FCT [2012] AATA 576, www.austlii.edu.au/au/cases/cth/AATA/2012/576.html

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