The AAT has affirmed the Commissioner’s decision to impose on a taxpayer ‘excess contributions tax’ (‘ECT’) in respect of excess non-concessional contributions made in the 2010-11 year.
- In 2008-09 year, the taxpayer made a personal non-concessional contribution to her fund of $450,000 , triggering the bring forward rule.
- On 1 July 2010, the taxpayer lodged an Notice of Intent to claim a tax deduction of $50,000 in respect of contributions made in the 2010-11 year.
- The taxpayer was eventually issued with an amended assessment for the 2010-11 year, in which adjusted taxable income of id=”mce_marker”3,468 was reduced to zero by a deduction claim for “reportable superannuation contributions” of the same amount.
- The taxpayer was then also issued with an ECT assessment in respect of $36,532 in excess non-concessional contributions.
- The taxpayer objected to the ECT imposed.
The Tribunal noted the issue concerned the treatment of the remaining part ($36,532) of the $50,000 concessional contribution made in the 2010-11 year. The taxpayer argued the “remaining part” does not attract ECT as it is not a “non-concessional contribution”. In essence, the taxpayer argued that – a valid concessional contribution is deductible; being deductible, it is allowable as a deduction; being allowable as a deduction, it is not with the meaning of “not allowable as a deduction”; and that being so, it is not a “non-concessional deduction” under s 292-90(1)(aa) and (4)(b) of the ITAA 1997.
The Tribunal did not agree. It said the flaw in the argument is the adjective “allowable” qualifies the subject deduction. In this regard, it said concessional contributions may generally be deductible, but a specific concessional contribution may only be allowable as a deduction if all relevant criteria are satisfied (including s 290-150 of the ITAA 1997 dealing with deductible personal contributions). If the criteria are not satisfied, the Tribunal said the concessional contribution will not be allowable as a deduction, and it will be treated as a non-concessional contribution subject to ECT.
In conclusion, the Tribunal found the part of the taxpayer’s concessional contribution that was not allowable as a deduction ($36,532) was a non-concessional contribution for the 2010-11 year. As result of the bring forward rule, the Tribunal held the non-concessional contribution limit of nil was exceeded in the relevant year and affirmed the imposition of ECT.
(AAT Case [2013] AATA 661, Re Sutton and FCT, AAT, Ref: 2013/1552, Webb M, 16 September 2013.)
[LTN 181, 18/9/13]