The AAT has agreed with the Commissioner that a taxpayer’s “honest mistake” and financial hardship did not constitute “special circumstances” under s 292-465 of the ITAA 1997 to disregard his excess non-concessional contributions for a financial year.
The taxpayer had made non-concessional contributions of $176,101 in the 2007-08 year, $147,544 in 2008-09 and $149,982 in 2009-10. While the taxpayer was entitled to use the “bring forward rule” in s 292-85 to make aggregate contributions of $450,000 over 3 years, the contributions for 2009-10 exceeded the cap by $23,627. The taxpayer applied to the Commissioner to exercise his discretion under s 292-465 to disregard the excess non-concessional contributions. The taxpayer submitted that “special circumstances” existed due to the financial hardship he was experiencing in supporting adult children and grandchildren, a commitment to provide for his younger wife and a failed investment opportunity.
The AAT upheld the Commissioner’s decision not to exercise his discretion to disregard the excess non-concessional contributions after finding that the taxpayer’s financial hardship did not constitute “special circumstances” under s 292-465(3). The AAT noted that the established authorities for “special circumstances” require something that is “unusual, uncommon or exceptional” which takes the events “out of the usual or ordinary case”. While the AAT was sympathetic to the taxpayer’s financial hardship, it held that such circumstances are not what the legislation contemplates when it refers to special circumstances.
(AAT Case [2012] AATA 667, Re Lynton and FCT, AAT, Ref No: 2012/2102, Hughes M, 2 October 2012.)
[LTN 192, 4/10]