The man was critical of complex laws that were, in his view, counter-intuitive: he could not understand why the government would penalise individuals making contributions to their superannuation, especially when a portion of those contributions was essentially comprised of recycled funds. But the AAT said ignorance of the law was rarely likely to be a matter that gives rise to special circumstances, thereby allowing the Tax Commissioner to make a determination to effectively ignore excess contributions.
Interestingly, the AAT said if it was pressed to decide, it would have concluded the determination was consistent with the object of the relevant law. It said the man had been making gradual contributions into the fund in accordance with the law. In the circumstances, the AAT said he was not advantaging himself or undermining the efficacy of the system when he put money back into his fund. However, the tribunal was required to rule on the application of all the relevant laws and that was not in favour of the taxpayer.
In the result, the tribunal affirmed the Commissioner’s decision. It said the law which explains how to calculate non-concessional contributions in a given year refers to “each” contribution and not the net contributions made. It also held the Commissioner’s discretion was not applicable. The tribunal said that, even if it did conclude there were special circumstances and the determination was consistent with the object of the law, it was still required to have regard to particular matters mentioned in the law.
In particular, the tribunal noted the taxpayer’s difficulty concerning whether it was reasonably foreseeable that a contribution would exceed the cap. The tribunal did not accept the taxpayer’s expectation that the super fund should have warned him of the risks. It also did not expect the taxpayer to necessarily understand the law himself. However, the Tribunal said it “would have thought the taxpayer might have asked for some advice”.
Superannuation issues of all kinds (including contributions, self-managed super funds (SMSFs), contribution caps, etc.) will continue to come before the courts and tribunals if for no other reason than the law governing them is complicated. The 2013-14 edition of The Essential SMSF Guide, written by Tony Negline and published by Thomson Reuters, seeks to enlighten the users of self-managed funds and help them through the maze – see details of this helpful guide here.
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. Featured product is the 2013-14 edition of “The Essential SMSF Guide“, written by Tony Negline – see details here.
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.
