An employer contribution via a superannuation clearing account has resulted in a $69,665 excess superannuation contributions tax liability for a taxpayer, representing an effective tax rate of 93%.
On 27 June 2008, the taxpayer’s employer paid a “top-up” superannuation contribution to a clearing account operated by a superannuation fund (Colonial First State). However, the employer contribution of $91,142 was not allocated to the taxpayer’s account within the superannuation fund until 23 July 2008 when the employer uploaded a contribution file. In May 2009, the taxpayer made a personal contribution of $90,000 to her self-managed super fund (SMSF), for which she claimed a deduction, and non-concessional contributions of $450,000. The Commissioner determined that the taxpayer had exceeded both her concessional and non-concessional contributions caps by $89,314 for the 2009 year. The Commissioner assessed the taxpayer to excess concessional and non-concessional contributions tax of $28,134 and $41,531, respectively. This represented an effective tax rate of 78% (ie 31.5% and 46.5%) plus the 15% contributions tax paid by the fund ie a total of 93%.
The AAT upheld the assessment after ruling that the employer contribution to the clearing account was not “made” to a complying superannuation fund in the 2008 year for the purposes of s 292-95(2)(a) of the ITAA 1997. Although the clearing account was opened by the superannuation fund, the AAT ruled that the clearing account was not itself a superannuation fund as it was in the name of the employer. Accordingly, the AAT considered that the payment on 27 June 2008 could not be said to have been “made” in the 2008 year to a complying superannuation fund. In addition, the AAT agreed with the Commissioner that there were no “special circumstances” to exercise his discretion under s 292-465 to reallocate the employer contribution to the 2008 year. The AAT rejected the taxpayer’s argument that the 78% tax only arose because of the taxpayer’s unusual circumstance. Rather, the AAT said that “special circumstances” need to be found beyond the actual tax rate intended by Parliament, and beyond the specific conditions which gave rise to that rate being imposed.
(AAT Case [2013] AATA 12, Re Verschuer and FCT, AAT, Ref No: 2012/0351, Deutsch DP, 14 January 2013.)
[LTN 9, 15/1/13]