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  • Rights of review

    A person may request the Commissioner’s discretion either:

    • any time after the contributions were made
    • when they receive either:  
      • an ECC or ENCC determination
      • a NOA (which includes ECC or associated earnings)
      • an ENCC tax assessment.
       

    A person may object to the:

    • Commissioner’s discretion decision
    • decision not to make a decision for Commissioner’s discretion
    • decision not to make a direction
    • ECC or ENCC determination
    • NOA (as it includes ECC or associated earnings)
    • ENCC tax assessment.

    These decisions are not subject to the general review provisions under the Administrative Decisions (Judicial review) Act 1977.

    Where a person is not satisfied with an objection decision they may request a review with the Administrative Appeals Tribunal (AAT), Federal Court or Federal Circuit Court.

    Commissioner’s discretion

    We can make a written determination to exercise discretion to either:

    • allocate all or part of a person’s concessional and/or non-concessional contributions to a different year
    • disregard all or part of a person’s concessional and/or non-concessional contributions for the purposes of Divisions 291 and 292 of the ITAA 1997.

    The provisions relating to the Commissioner’s discretion are in:

    Application requirements

    An application for the Commissioner’s discretion must be made in the approved form. Our form is not required to be used; however, the application must include all of the information requested in the form.

    An application for discretion must set out the special circumstances that caused the contributions cap to be exceeded and include evidence to support the contentions.

    A person may apply for Commissioner’s discretion:

    • any time after the contributions were made to which the discretion relates, and
    • before the end of 60 days from when they receive either an:  
      • ECC or ENCC determination
      • ENCC tax assessment.
       

    We have the power to allow further time to lodge the application. However, the application must outline why the person was unable to lodge the application on time.

    For more information, refer to Application – excess contributions determination (NAT 71333).

    Criteria for exercising discretion

    The discretion can only be exercised if we consider that the following two pre-conditions have been met:

    • there are special circumstances
    • making the determination will be consistent with the objective of Divisions 291 and 292.

    The term ‘special circumstances’ has been considered in case law and has been considered as unusual, exceptional, abnormal or uncommon where applying the law would result in an unjust, unfair or otherwise inappropriate outcome.

    The objectives of Divisions 291 and 292 are 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.

    If the two pre-conditions have been met, we may have regard to the following:

    • whether it would be more appropriate to allocate a contribution made in the relevant income year to another income year
    • whether it was reasonably foreseeable, when making the relevant contribution that there would ECC or ENCC and in particular  
      • if the relevant contribution is made in respect of the person by another person–the terms of any agreement or arrangement 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.

    Special circumstances

    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 tax in relation to excess contributions is not a special circumstance. It is the intent of the legislation that a person is liable to pay tax where they exceed their contributions cap (or caps).

    Disregarding and reallocating contributions

    Where our decision is to disregard an amount of concessional or non-concessional contributions, then that 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 either:

    • a person 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 Commissioner’s decision, if any contributions were disregarded or reallocated and, where necessary, the assessment (or assessments) will be amended.

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

    Exercise 17

    Select the correct response. Which of the following factors is unlikely to be considered relevant in a Commissioner’s discretion decision?

    • The person could not have reasonably known the contribution would exceed the cap.
    • The person had limited control over the amount of the contribution and when it was made.
    • It is more appropriate to allocate the contribution to another income year.
    • The person received a windfall gain and wanted to invest in super.

    Answer 17

    The correct answer is the last response - the person received a windfall gain and wanted to invest in super. The super fund must be accumulated gradually over a person’s working life. Simply wishing to invest in super by itself is not a relevant factor in a Commissioner’s discretion decision.

    Objections

    An objection disputes the way we have applied the law and/or may also dispute the facts. Part IVC of the TAA enables a person to either:

    • apply to the AAT for a review of an objection decision
    • appeal to the Federal Court against the objection decision.

    Concessional contributions

    Subsection 291-465 (7) and subsection 291-465(8) of the ITAA 1997 provide that a person may object in relation to ECC where they are dissatisfied with:

    • their NOA or NOAA (which includes their ECC)
    • their ECC determination
    • the Commissioner’s discretion decision, or a decision not to make a discretion.

    The objection must be made by the later of either:

    • two or four years after the original income tax assessment is given to the person, in line with paragraphs 14ZW(1)(aa) and 14ZW(1)(aac) of the TAA
    • 60 days from the date of the NOAA is given where the grounds for the objection relate to the part of the assessment that was amended.

    The ECC determination is treated as prima facie evidence of the matters in the notice. The ordinary meaning of prima facie is ‘at first appearance; at first view, before investigation’ (The Macquarie Dictionary [Multimedia], version 5.0.0, 1/10/01).

    Two or more decisions are treated as a single decision for common objection grounds. Therefore, where a person is dissatisfied on a particular ground they can make one objection against two or more of the above decisions. An objection must be in a manner set out in Part IVC of the TAA.

    Non-concessional contributions

    In relation to non-concessional contributions, if a person is dissatisfied they may object to the following decisions:

    • an income tax assessment that includes associated earnings
    • an ENCC determination
    • an ENCC tax assessment
    • a Commissioner’s discretion decision or a decision not to exercise a discretion
    • a direction (that super interests are nil) or a decision not to make a direction.

    Two or more decisions are treated as a single decision for common objection grounds. Therefore, where a person is dissatisfied on a particular ground they can make one objection against two or more of the above decisions. An objection must be in a manner set out in Part IVC of the TAA. The objection must be made within four years after the decision is given to the person in line with paragraphs 14ZW(1)(aa) and 14ZW(1)(aac) of the TAA.

    Amendments

    An amendment request usually focuses on a factual error, such as an incorrectly reported amount on a tax return or MCS.

    Excess contributions are determined from information obtained from a person’s:

    • tax return, such as super deductions claimed or date of birth
    • super fund information reported.

    If a person disagrees with the information supplied by their super fund they should attempt to resolve the issue with the fund.

    An amendment request to a tax return must be made within four or two years from the day of the assessment dependent on the provisions of section 170 of ITAA 36.

    Amendments to the person’s tax return, date of birth or information from the super fund will trigger an NOAA and ECC determination (for concessional contributions).

    Review and appeal

    Tax laws specifically give a person the right to go to the AAT or the Federal Court of Australia for a review of some of our actions or decisions. However, in most cases, a person must lodge an objection and be dissatisfied with the outcome before seeking an external review.

    Administrative Appeals Tribunal

    The Administrative Appeals Tribunal (AAT) is an independent body that can review some decisions we make. These include decisions on objections and decisions made under the Freedom of Information Act.

    Federal Court and Federal Circuit Court

    A person can also apply to the Federal Court and Federal Circuit Court for a review of our decisions. Court proceedings are more formal and costly than tribunal hearings.

    Time limits

    A person generally will have 60 days from the date of the notice advising our objection decision to seek a tribunal or court review of that decision.

      Last modified: 28 Mar 2018QC 50732