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  • Commissioners discretion

    The Commissioner can make a written determination to exercise discretion and allocate all or part of a person's concessional or non-concessional contribution to a different financial year or disregard all or part of a contribution for the purposes of ECT under subsection 292-465(1).

    Criteria for exercising discretion

    In accordance with subsection 292-465(3), discretion can only be exercised if we recognise there are special circumstances, and making the determination will be consistent with the objective of the ECT rules.

    Special circumstances are legally defined as unusual, exceptional, abnormal or uncommon if applying the law would result in an unjust, unfair or otherwise inappropriate outcome.

    Section 292-5 states that the object of the ECT is to ensure that the amount of concessionally taxed super benefits received by a person results from super contributions that have been made gradually over the course of the person's life.

    The Commissioner's discretion can only be used in limited circumstances. Whether a person's circumstances will be considered special will depend on the individual facts of their case. The following are generally not considered to be special circumstances:

    • financial hardship from having to pay the tax
    • not knowing the law
    • incorrect professional advice
    • making a mistake.

    Simply being liable to pay ECT is not a special circumstance. It is the intent of the legislation that a person is liable to pay ECT if they make contributions to their super fund that exceeds the person's contribution cap.

    In accordance with subsections 292-465(5) and (6), we, in making the determination, may consider whether:

    • a contribution made in the relevant income year would be more appropriately be allocated towards another income year instead
    • it was reasonably foreseeable, when the contribution was made, that the person would have excess concessional contributions or excess non-concessional contributions for the relevant income year, and in particular  
      • if the relevant contribution is made by another person - the terms of any agreement or arrangement between the person and the other person as to the amount and timing of the contribution
      • the extent to which the person had control over the making of the contribution
      • any other relevant matters.

    Disregarding and reallocating contributions

    If we decide to disregard an amount of concessional or non-concessional contributions, the amount will not be counted towards the relevant contributions cap for any income year.

    If an amount is allocated to another income year, the amount will be counted towards the relevant contributions cap for the income year to which it is reallocated.

    A contribution will only be considered to be more appropriately allocated to another income year if it should have been made in a different income year. For example, if an employer was required to make a contribution in a different income year, it will usually be considered to be more appropriately allocated to that income year.

    A contribution will not be considered to be more appropriately allocated to another income year just because:

    • an individual intended for it to be made in a different income year
    • the contributor's liability to make the contribution accrued in a different income year (for example, an employer's July contribution related to work done in the June quarter)
    • an amount was sent to the super fund in one income year and received in another income year (for example, a cheque was written or the internet was used to transfer money but it was not received by the fund until the next income year).

    The person will be advised in writing of the decision whether or not to disregard or reallocate contributions and, if necessary, ECT assessments will be amended.

    A super fund is not required to re-report contributions because they have been disregarded or reallocated.

      Last modified: 06 Sep 2017QC 34181