Just a quick update on yet another excess superannuation contributions tax case that recently came before the Administrative Appeals Tribunal (AAT). The taxpayer lost in this case.
On June 27, 2008, the taxpayer’s super fund received four EFT payments from the taxpayer’s employer. As the super fund was unable to identify on whose behalf the payments were made, they were held in a suspense account.
On July 1, 2008 (a Tuesday), the super fund received two remittance advices, both dated June 27, 2008, identifying concessional contributions on behalf of the taxpayer of $14,508.07 in respect of May 2008 and $7,076.44 in respect of the first half of June 2008. On the same day (July 1, 2008), a super guarantee scheme contribution of $1,782.20 and a salary sacrifice contribution of $19,802.31 were allocated to the taxpayer’s account.
Further concessional contributions totalling $91,316.98 were made in the 2009 financial year by the taxpayer’s employer on behalf of the taxpayer. These comprised salary sacrifice contributions of $73,955.39 and super guarantee scheme contributions of $17,361.59. These contributions were generally made on a monthly basis. The total amount of employer super contributions on behalf of the taxpayer for 2009 was $112,901.49, which exceeded the concessional contributions cap of $100,000 for persons aged 50 and over applicable for that year (the taxpayer was over 50 at the end of the 2009 financial year). An excess super contributions tax assessment resulted.
The taxpayer requested that the Commissioner exercise his discretion to reallocate concessional contributions of $21,584.51 (covering the super guarantee and salary sacrifice payments for May 2008 and part of June 2008 noted above) from the 2009 year to the 2008 year. This would have kept him below the cap for the 2009 year. The Commissioner declined.
The crux of the decision was the AAT’s agreement with the Tax Commissioner that if a superannuation contribution is transferred by EFT to the superannuation provider, the contribution is “made” when the funds are credited to the relevant member’s account. Accordingly, in this case, the relevant contribution was made on 1 July 2008 (ie in the 2009 financial year). End of story.
SMEs need to be extremely careful when making superannuation contributions by EFT. Timing is crucial.
Terry Hayes is the Editor-in-Chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
Terry Hayes is the editor-in-chief of tax news reporting at Thomson Reuters, a leading Australian provider of tax, accounting and legal information solutions.
