In another excess contributions tax case, the AAT has ruled that there were no “special circumstances” under s 292-465 of the ITAA 1997 to disregard or re-allocate a taxpayer’s excess non-concessional contributions for a year.

The taxpayer, a retired teaching professor, had made personal non-concessional contributions of $175,600 to his superannuation funds in the 2010 financial year. He had intended to claim $26,000 of that amount as a personal superannuation contribution deduction (PSCD) in his tax return for the 2010 year. However, he did not actually claim a PSCD as he was not entitled to do so as he had breached the 10% rule under s 290-160 of the ITAA 1997. This innocent breach had more serious consequences in the 2011 year. On 5 July 2010, the taxpayer made a non-concessional contribution of $450,000. In so doing, he had overlooked the fact that his contributions for 2009-10 had exceeded the then $150,000 cap and automatically triggered the 3-year “bring forward rule”. As such, his remaining non-concessional contributions cap for the 2011 and 2012 years was $274,400 (ie $450,000 minus $175,600). This lead to an ECT liability of $83,417 for the 2011 year, being 46.5% of the total excess non-concessional contributions of $179,392.

The AAT agreed with the Commissioner that the taxpayer’s situation did not amount to “special circumstances” under s 292-465 to disregard or re-allocate the excess contributions. The AAT considered that the breach of the 10% rule, which in turn triggered the bring forward rule, did not constitute special circumstances.

(Re Brady and FCT [2016] AATA 97, AAT, File Nos: 2014/2957 & 2015/0370, Lazanas SM, 23 February 2016.)

[FJM Note:  These are such harsh cases, making me wonder why the FCT and the Tribunal take such a hard line on a provision that is plainly designed to give relief. I think I’ve only ever seen one of a multitude of these cases succeed.]