The AAT has set aside the Commissioner’s decision and ordered that a non-concessional superannuation contribution for the 2009 year, and the related penalty that was assessed, be disregarded and not be taken into account in consideration of the liability for excess non-concessional contributions tax for the subsequent transaction in 2010.
Prior to 2008, a husband and wife had separate superannuation accounts. In 2008-09, in anticipation of the husband reaching eligibility for the Age Pension, he transferred his superannuation into a new account that was in his wife’s name with his super fund (“Transaction 1”). This occurred following advice sought from both a Centrelink Finance Officer and a representative of the husband’s super fund.
In 2010-11, the wife then made another transaction with her superannuation account in her fund, this time withdrawing $240,000 and re-contributing $200,000 of it to the same account, on the understanding that this would be beneficial to her children after she died (“Transaction 2”).
The Commissioner assessed the wife (the taxpayer in this case) as having made an excess non-concessional contribution in 2010-11 of $43,858 for that year. She requested the Commissioner exercise his discretion to disregard that amount or have it allocated to another financial year. The Commissioner declined. As a consequence, the Commissioner then issued an excess contribution assessment on 11 May 2012. The wife’s objection was disallowed and she appealed to the AAT.
After examining the relevant statutory provisions (including the “Special circumstances” rules) and relevant case law, the Tribunal said it was satisfied there were “special circumstances” in relation to Transaction 1, but not Transaction 2, as far as the taxpayer was concerned. Therefore, the Tribunal held that:
- in accordance with s 292-465(1)(b) of the ITAA 1997, the non-concessional contribution for 2009 (Transaction 1) was to be disregarded and not taken into account in consideration of the liability for excess non-concessional contributions tax for the 2010 transaction (Transaction 2);
- Transaction 2 did not constitute “special circumstances”; and
- the penalty assessment be set aside for these transactions.
(AAT Case [2013] AATA 49, Re Dowling and FCT, AAT, Levy RFD SM, AAT Ref Nos: 2012/2727 and 2012/2728, 1 February 2013.)
[LTN 22, 4/2/13]