No relief from excess super contributions tax bill
A taxpayer has been unsuccessful before the AAT in arguing for relief from the Commissioner's imposition of excess non-concessional contributions tax.
The taxpayer had contributed $430,000 into his super fund account in the 2007–2008 financial year. However, in September 2008 and in response to the global financial crisis (GFC), the taxpayer withdrew half the money. In September 2009, the taxpayer then redeposited $100,000 back into his super account. The Commissioner said the taxpayer exceeded the $450,000 contributions limit when he made the $100,000 payment within the three-year period under the bring forward rule. The Commissioner issued an excess contributions tax assessment on the $80,000 excess.
The taxpayer argued that the statute should be interpreted in a way that only catches net contributions that exceed the cap. Alternatively, he argued there were special circumstances warranting the Commissioner's discretion under s 292-465 of the Income Tax Assessment Act 1997 (ITAA 1997) to ignore the contribution or treat it as if it had been made in a different period. The taxpayer claimed that the GFC was an unusual event, he was ignorant to the requirements of the law, he thought there would be no adverse tax consequences as he thought putting money into super (especially the same money previously contributed) was what the Government was encouraging, and his super fund did not warn him against exceeding the cap.
The AAT affirmed the Commissioner's decision. It said s 292-90 of the ITAA 1997, which explains how to calculate non-concessional contributions in a given year, refers to "each" contribution and not the net contributions made. It also held that the situation did not enliven the discretion sought by the taxpayer under s 292-465. The AAT said that, even if it did conclude that there were special circumstances and the determination was consistent with the object of Div 292 (ie the matters referred to in s 292-465(3)), it was still required to have regard to the matters referred to in s 292-465(5) and (6).
In particular, the AAT noted the taxpayer's difficulty in relation s 292-465(6) – that is, whether it was reasonably foreseeable that a contribution would exceed the cap. The AAT did not accept the taxpayer's expectation that the super fund should have warned him of the risks. Further, while the AAT did not expect the taxpayer to necessarily understand the law himself, it said it "would have thought the taxpayer might have asked for some advice". In relation to s 292-456(5), the AAT said there was "no particular reason (other than the fact it gets the taxpayer out of trouble) why it was more appropriate to allocate the payment to another year of income".
Re KFBC and FCT [2013] AATA 577, www.austlii.edu.au/au/cases/cth/AATA/2013/577.html.
