Special circumstances found to set aside excess contributions tax
The AAT has found that there were special circumstances in a taxpayer's situation to allow for the exercise of the Commissioner's discretion in s 292-465(1) of the ITAA 1997 to reallocate monies paid into a super fund on 28 and 29 July 2009 to be attributed to the 2008–2009 financial year.
Background
The taxpayer exceeded the concessional contributions cap for the 2009–2010 financial year, which was $50,000, by $10,068. The Commissioner issued an excess contributions tax assessment of $3,171. The taxpayer made salary sacrifice payments each month with the intention of staying below the relevant cap. The taxpayer made salary sacrifice payments of $5,000 per month, but when the concessional cap was reduced to $50,000, he reduced his payments to $4,000 per month initially, then to $3,000 per month.
The AAT heard that the disputed amounts, intended to be salary sacrifice amounts for the April, May and June 2009 months, were not transferred by the taxpayer's employer to the super fund until July 2009. The taxpayer said he was unaware of the delay and that, operating from monthly payslips, he was of the belief that the sums had been transferred to the fund. There was no agreement between the taxpayer and his employer as to when salary sacrifice amounts would be transferred by the employer to the super fund.
Decision
The AAT found that special circumstances existed to warrant the disputed amounts being attributed to the 2008–2009 financial year. The AAT was also of the view that the taxpayer's behaviour, in making regular contributions, demonstrated that he was building his super by making gradual contributions over the course of his life (per the objective of Div 292 of the ITAA 1997). The AAT noted that if the July 2009 payments had been credited to the 2008–2009 financial year, the taxpayer's concessional super contributions would have amounted to $48,000 (ie under the relevant cap).
In finding that there were "special circumstances", the AAT member said recent AAT decisions "seem to have adopted an unduly narrow interpretation" of what may constitute "special circumstances". In particular, the AAT member suggested that the decision in Re Tran and FCT [2012] AATA 123, in which the view was taken that circumstances will not be special unless they are out of the ordinary, was "misconceived". The AAT member, in this case, was of the view that "something unfair, unintended or unjust" could be a ground for finding special circumstances.
The Commissioner had argued that overpayment was reasonably foreseeable as the taxpayer had received notices from the super fund for periods ended 30 June 2009 and 31 December 2009, which showed that continued payments would result in excess payments for the 2009–2010 year. Although the AAT agreed, it said "it was perfectly reasonable for the [taxpayer] to envisage that his employer would make the payments when they were shown in the payment advices issued to him each month". Accordingly, the excess contributions tax assessment was set aside.
Re Hamad and FCT [2012] AATA 530, www.austlii.edu.au/au/cases/cth/AATA/2012/530.html.
