• ATO law administration

    Law Administration Practice Statement PS LA 2008/1External Link provides guidance to ATO staff on how they exercise the Commissioner's discretion. When exercising the discretion, they:

    • must consider
      • whether there are special circumstances
      • the object of Division 292
    • may consider
      • whether a contribution made in one income year should be more appropriately allocated towards a different income year
      • whether it was reasonably foreseeable when the contribution was made that there would be excess concessional or non-concessional contributions for the income year
      • any other relevant matters.

    PS LA 2008/1 indicates that the Commissioner would not generally consider isolated factors amount to special circumstances that make the imposition of the tax unjust, unreasonable or inappropriate.

    The practice statement states that the following do not generally, on their own, constitute special circumstances:

    • financial hardship
    • ignorance of the law
    • incorrect professional advice
    • retrospectivity of law.

    In the absence of additional factors, the Commissioner will not exercise discretion if the excess contributions arise due to employer contributions required by the Superannuation Guarantee (Administration) Act 1992.

    For example, the Commissioner's discretion would not be exercised if a person is receiving $100,000 per year cash salary from three unrelated employers and has $27,000 in SG contributions paid on their behalf, which is $2,000 in excess of the concessional contributions cap for the 2010-11 income year.

    Furthermore, the Commissioner would not consider there to be special circumstances if a person received an ECT assessment as a result of a change to the law that reduced the relevant contributions cap (for example, the reduction in the concessional contributions cap from $50,000 for the 2008-09 income year to $25,000 for the 2009-10 income year).

    The PS LA provides examples demonstrating how the discretion should be exercised and gives ATO staff the following guidance on the exercise of discretion:

    • they should not adopt a rigid or inflexible approach
    • decision makers must not take into account irrelevant considerations and must exercise their own judgment
    • they must make a decision to exercise the discretion
      • in good faith
      • without bias
      • not at the direction of another person.
    Further information

    Refer to Law Administration Practice Statement PS LA 2008/1External LinkThe Commissioner's discretion to disregard or reallocate concessional and non-concessional contributions for an income year.

    End of further information
      Last modified: 22 Nov 2013QC 34181