Excess contributions case – special circumstances win for taxpayer
The case below involves a taxpayer attempting to argue that an excess contribution tax assessment should be set aside for ‘special circumstances’. Somewhat against the flow, the taxpayer was unexpectedly successful.
Facts of the case
During the 2010 financial year, the taxpayer’s employer made total superannuation contributions of $71,551 ($21,551 over the limit of $50,000).
The employer’s super contributions were made to two different superannuation funds – $25,367 to AMP and $46,184 to Tasplan.
During the 2009 income year, the taxpayer had asked their employer to stop making any super contributions to AMP from 1 July 2009, because they were unhappy with the 4.5% commission levied by AMP, and they asked that all contributions from 1 July 2009 be forwarded to Tasplan.
Unbeknown to the taxpayer, their employer had made super contributions of $25,367 that related to the 2009 income year in July 2009 (i.e., the 2010 income year) and these contributions were made to AMP.
The taxpayer was then assessed as having excess contributions of $21,551, resulting in excess contribution tax (‘ECT’) of $6,788.70.
The taxpayer then sought relief from the ECT, on the basis that ‘special circumstances’ existed and that the contributions should be disregarded or reallocated.
The AAT said that the taxpayer was understandably not aware of the super contributions made to AMP in July 2009, because all super contributions from 1 July 2009 should have been paid to Tasplan.
According to the AAT, these facts amount to ‘special circumstances’. As such, the AAT ordered that the $25,367 contributions paid to AMP in July 2009 (being the 2010 income year) be reallocated to the 2009 income year, resulting in no ECT being payable.