Another case of excess non-concessional contributions and the ATO declining to exercise its discretion as there were no special circumstances: Brady’s Case [2016] AATA 97
Another case of excess non-concessional contributions (ENCCs) arising because the taxpayer was unaware that the bring forward rule had been triggered in respect of 2010 when he intended to trigger the rule in 2011.
Consequently, the taxpayer exceeded his NCC cap by $180,000 giving rise to an $83,000 tax bill. The bring forward was triggered in 2010 as he thought the excess over $150,000 could be claimed as a tax deduction – unfortunately the taxpayer did not satisfy the 10% rule.
The taxpayer argued that special circumstances existed and that the ENCCs should be reallocated. The claimed special circumstances were lack of knowledge of the 10% rule, inappropriate advice, acting in good faith, and adverse impact of penalty tax on a self-funded retiree. AAT held no special circumstances existed.
Two points should be made:
- Given the almost impossible to satisfy threshold of “special circumstances” – the taxpayer should have sought a court order for rescission of the superannuation contribution on the basis of a material and causative mistake of fact.
- Secondly, the issue of excess contributions has now been largely resolved by legislative changes taking effect from the 2013 tax year. Brady’s Case [2016] AATA 97
Michael Hallinan
Special Counsel
Townsends Business & Corporate Lawyers
t: (02) 8296-6205
Twitter: @TownsendsLaw
e: michael@townsendslaw.com.au