The AAT has decided that an excess contributions tax assessment should be set aside as 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 2009-10 financial year, the taxpayer’s employer made payments on behalf of the taxpayer to 2 super funds (an AMP fund and a Tasplan fund). There were “salary sacrifice” payments to AMP and to Tasplan, as well as superannuation guarantee scheme payments to AMP to Tasplan.

The AMP payments were made in early July 2009, notwithstanding the taxpayer’s salary sacrifice agreement that, from 1 July 2009, payments be made to Tasplan only (the taxpayer was dissatisfied with the 4.5% commission charged by AMP and decided to change funds).

The contributions exceeded the taxpayer’s concessional contributions cap for 2009-10 of $50,000 (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 that excess contributions had been made was when the Tax Office advised him 10 months after the end of the 2009-10 financial year.

The AAT was satisfied that there were “special circumstances” in this case, in particular:

  • the taxpayer sought to arrange his affairs so that the concessional contributions cap was not 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;
  • the agreed amount of salary sacrifice for 2009-10 was well within the cap;
  • the AAT said the fact that the July 2009 payments were made to AMP indicated that they were intended for the 2008-9 financial year; and
  • 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 (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 2008-09 financial year.

(AAT Case [2012] AATA 576, Re Longcake and FCT, AAT, Ref No: 2012/0354, Groom DP, 30 August 2012.)

[LTN 169, 28/8]