S Webb M

Administrative Appeals Tribunal, Canberra


Decision date: 6 March 2012

S. Webb (Member)

6 March 2012

1. New concessional tax arrangements for superannuation contributions came into effect in 2007. Under the new arrangements contributions of up to $50,000 would be taxed at the concessional rate of 15 percent, with excess contributions being taxed at 31.5 percent. The Commissioner of Taxation decided that Robert Peaker's superannuation contributions in 2007-2008 exceeded the concessional contribution cap. Mr Peaker objected[1] T10. . The Commissioner issued an objection decision[2] T2. . Unhappy with this decision, Mr Peaker applied for review.

2. A hearing was listed. Mr Peaker did not attend and gave no oral evidence - he was represented by his father, Francis Peaker.

3. The following facts are established without controversy. Prior to 30 June 2007, Mr Peaker was employed by Chamberlain Morris. Mr Peaker did not make any special arrangement with this employer in respect of salary sacrifice or the payment of superannuation contributions. Chamberlain Morris was liable to make a superannuation guarantee payment in respect of Mr Peaker for the period April to June 2007, and did so. A superannuation contribution of $7,215.83 was mailed by the employer on 28 June 2007 and was recorded as income to the superannuation fund by REI Super on 5 July 2007[3] T13 folio 70. . Contributions to Mr Peaker's REI Super account totalling $26,889.97 were reported in 2007-2008[4] T3 folios 28-29. . Additional contributions were made to another fund by Mr Peaker's (then) new employer - Peter Blackshaw Real Estate: contributions totalling $30,600 were made to Peaker Superannuation Fund during 2007-2008. Thus, Mr Peaker's superannuation contributions for 2007-2008 were reported to be $57,489.97. Under section 292-20 of the Income Tax Assessment Act 1997 (Income Tax Assessment Act) a concessional contributions cap of $50,000 applied in 2007-2008. The Commissioner decided that Mr Peaker's superannuation contributions in 2007-2008 exceed this cap by $7,489.97[5] T5. and issued an Excess Contributions Notice of Assessment in the amount of $2,359.30[6] T6. .

4. There are two issues to be decided:

  • (a) Whether the concessional superannuation guarantee contribution reported on 5 July 2007 (the July 2007 contribution) is correctly applied in the 2007-2008 financial year; and, if so,
  • (b) whether all or part of Mr Peaker's concessional contributions for the 2007-2008 financial year is to be disregarded, or allocated instead for the purposes of another financial year.

The July 2007 contribution

5. Mr Peaker says that the superannuation guarantee contribution was paid in the 2006-2007 financial year, and it was in respect of his employer's superannuation guarantee obligations in that financial year.

6. By operation of section 23(6) of the Superannuation Guarantee (Administration) Act 1992 (Superannuation Guarantee Act), a contribution to a complying superannuation fund may be deemed to have been made in a quarter if it is made within the period of 28 days after the end of the quarter. Under the Income Tax Assessment Act, however, there is no such deeming provision in respect of concessional contributions for a financial year. Section 292-25 of that Act provides that, subject to some exceptions that are not presently relevant, a contribution is considered a concessional contribution for a financial year if:

  • (a) it is made in the financial year to a complying superannuation plan in respect of the person; and
  • (b) it is included in the assessable income of the superannuation provider in relation to the plan.

7. When these provisions and the legislative schemes in which they appear are carefully considered, it can clearly be seen that the Superannuation Guarantee Act proceeds on the basis that the obligation on an employer to make superannuation contributions in respect of an employee is time limited - if the contribution is not made within 28 days, the employer may be liable for additional charges and penalties. The superannuation contribution liability is exhausted only when the contribution is made. As superannuation guarantee contributions are calculated with reference, proportionally, to the taxpayer's earnings, it follows, without conceptual difficulty, that a contribution of this kind in respect of a quarter may be expected to be made only once the earnings have been earned and related payments made to the taxpayer for that quarter. The Superannuation Guarantee Act is struck in this way - a period of 28 days is allowed for superannuation guarantee contributions to be made for the benefit of a taxpayer following the completion of a quarter. In this way the contribution is counted against the originating superannuation guarantee liability in respect of a quarter, even where superannuation guarantee contributions are not made within that quarter.

8. But different considerations arise in respect of the Income Tax Assessment Act provisions dealing with concessional superannuation contributions in a financial year. Under these provisions, concessional superannuation contributions are calculated with reference to the contributions made to complying superannuation funds, by way of assessable income. The origin of liability to make a contribution is not germane to the assessment of contributions actually made during a financial year. Importantly, a contribution to a superannuation fund is "made" when the contribution is received by the fund. If the contribution is made by cheque conveyed by post, the contribution is not "made" until the cheque is received by the fund (unless it is dishonoured).

9. It is accepted that Chamberlain Morris made a superannuation guarantee contribution of $7,215.83 in respect of Mr Peaker's employment and earnings in the April-June quarter of the 2006-2007 financial year. It appears that the payment was made by cheque conveyed by post. It does not appear in the records of REI Superannuation until 5 July 2007. That is the date on which the contribution was "made". Even though the liability to make the contribution arose in the preceding quarter, in 2006-2007, it does not follow that the contribution is deemed to have been made in that preceding quarter for the purposes of the Income Tax Assessment Act concessional contribution provisions.

10. The superannuation contribution was made on 5 July 2007, within the 2007-2008 financial year, and it counts towards Mr Peaker's concessional contribution cap for that year.

Special circumstances

11. Mr Peaker asserts that special circumstances arise in his case and all excess concessional contributions in 2007-2008 should be disregarded or allocated to another financial year. He says that the introduction of new legislative arrangements and rules governing the tax assessment of superannuation contributions in 2007 should not have a retrospective effect. By his reasoning, the constructive interaction of the Superannuation Guarantee Act and subdivision 292-B of the Income Tax Assessment Act for which the Commissioner contends would have a retrospective effect, where the July 2007 contribution is accepted as applying to the preceding quarter in 2006-2007 for the purposes of the Superannuation Guarantee Act, but it is also taken to apply, with penalising effect, in the 2007-2008 financial year for the purposes of the concessional contribution arrangements. This retrospective effect is not expressly provided for by the Act; it was not intended and it is a special circumstance.

12. Furthermore, in Mr Peaker's submission, even though he was not aware of the ATO's treatment of the July 2007 contribution[7] T1 folio 4. , his circumstances are identical to those in Example 7 of the Commissioner's Practice Statement - PS LA 2008/1 concerning "George"[8] T10 folios 55-58. .

13. Section 292-465 of the Income Tax Assessment Act confers discretion upon the Commissioner, and presently the Tribunal, to disregard, or to allocate to another financial year, all or part of the concessional contributions of a taxpayer. Importantly, the discretion is essentially preconditioned by the existence of special circumstances. The term "special circumstances" is not given any particular meaning, but may readily be understood in common usage to refer to circumstances that are out of the usual or ordinary course, where something that is unfair, unintended or unjust has occurred, for example[9] Re McMennemin and Federal Commissioner of Taxation 2010 ATC ¶10-145 ; (2010) 53 AAR 187 at 217-218; Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545. . The term is instrumental - "a direction to the decision-maker that the discretion it constrains is not lightly to be enlivened"[10] Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 535. .

14. Mr Peaker's submissions concerning a retrospective effect arising from the constructive interaction of the superannuation guarantee obligations, under the Superannuation Guarantee Act and the concession contributions cap and excess tax provisions, under the Income Tax Assessment Act, lack merit. The statutory arrangements and provisions to which he points do not have a retrospective effect and it is not correct to characterise the effect of these provisions on Mr Peaker in 2007 in this way. On the one hand his employer was liable to pay a superannuation guarantee contribution to a superannuation fund for Mr Peaker's benefit within 28 days following the end of the April-June quarter, that is before 28 July 2007. On the other hand, any concessional contribution that was made for his benefit after 1 July 2007 and before 30 June 2008 counted towards his applicable concessional contributions cap for that financial year. These circumstances are in no way special, they apply by operation of the legislative schemes, consistent with the express terms and purposes of the provisions of each enactment. Furthermore, they apply generally to employers and taxpayers.

15. I note in passing that Mr Peaker's submissions in respect of example 7 in PS LA 2008/1 concerning "George" are not made out. The example proceeds on specific facts, namely that "George" made a formal arrangement for annual superannuation contributions of $50,000 under a salary sacrifice with his employer, but the employment made a late payment which resulted in two payments being made within one financial year. Under this example, "George" did not control the timing of contribution payments even though there was a formal salary sacrifice arrangement in place, and he could not reasonably have foreseen that his employer would make a late contribution payment. Mr Peaker admits that he did not have a salary sacrifice arrangement in place with his employer - the payment of superannuation contribution payments by his employer was a function of the Superannuation Guarantee Act, whereby superannuation guarantee contribution payments are to be made within 28 days following the period to which they relate. On that basis, Mr Peaker's employer was required to make a superannuation guarantee payment in respect of the April-June quarter in 2007 by 28 July 2007. This could readily have been foreseen by Mr Peaker. Furthermore, the timing of the superannuation guarantee payment in July 2007 bears a striking similarity to the timing of similar contribution payments in 2006. It appears that a superannuation guarantee contribution in respect of the April-June quarter in 2006 was paid by cheque, drawn on 29 June 2006[11] T13 folio 69. , but this did not appear in Mr Peaker's REI Super account until 4 July 2006[12] T13 folio 68. . A further superannuation guarantee contribution by a previous employer was paid into that REI Super account on 17 July 2006. Although there is no evidence concerning the period to which this contribution relates, it may be inferred that it is a preceding period of one or more quarters, ending on 30 June 2006.

16. Clearly, the facts of Mr Peaker's case are different than those set out in the example. There is no doubt that, if the facts were the same, there may be a basis on which to consider whether the circumstances would be special circumstances; but the facts are not the same.

17. Mr Peaker asserts that the Commissioner's contention does not advance the object of Division 292 of the Income Tax Assessment Act, namely to ensure contributions are made 'gradually over the course of the person's life' under section 292-5 of that Act. This assertion is not persuasive. Under the Superannuation Guarantee Act, the pattern of superannuation guarantee contribution payments follows the pattern of Mr Peaker's employment. This is not a case in which any artificial distortion or bunching of Mr Peaker's superannuation contributions is apparent.

18. It appears that Mr Peaker and his father "treated the payment as relating to the 2007 year when we calculated the amount necessary to bring total contribution for the 2008 year to $50 000"[13] T13 folio 65. . The basis for this approach is not entirely clear, although it is likely that an interpretation was made having regard to the superannuation guarantee scheme, where Mr Peaker planned "to contribute $50 000 minus contributions already made"[14] Written submission handed up at hearing. . If Mr Peaker had considered the terms of the Income Tax Assessment Act he could reasonably have foreseen that he may have had excess concessional contributions in 2007-2008.

19. There is no firm basis to conclude that the July 2007 contribution is more appropriately applied to another financial year - the contribution was made when it was received as income into the REI Super Fund.

20. It may be accepted that Mr Peaker (or perhaps his father) was not aware of the new arrangements when they commenced in 2007. But ignorance of that kind is not a special circumstance[15] See Re Schuurmans-Stekhoven and Commissioner of Taxation [2012] AATA 62 , for example . . I accept the proposition that information about these changes was publicly available - the measures were set out in the Federal Budget in May 2007 - and Mr Peaker could have obtained it if he desired to do so.

21. Mr Peaker did not give oral evidence. It is difficult, therefore to assess his particular circumstances and the effects, if any, of the excess concessional contributions arrangements on his circumstances in 2007-2008 or subsequently. All that can fairly be said is that he misconstrued the legislative scheme concerning concessional contributions, possibly through ignorance, and his superannuation contributions in 2007-2008 exceeded the applicable concessional cap, whereupon a 31.5 percent tax rate applied to the amount of the excess.

22. There is not sufficient evidence to conclude that Mr Peaker was affected by any special circumstances - on the present evidence, he was not.

23. I note in closing that Mr Peaker bears the weight of adducing evidence necessary to make out his case. To my mind, he has not done so and the essential precondition to the discretion conferred by section 292-465 of the Income Tax Assessment Act is not established.

24. The decision under review is affirmed.


[1] T10.
[2] T2.
[3] T13 folio 70.
[4] T3 folios 28-29.
[5] T5.
[6] T6.
[7] T1 folio 4.
[8] T10 folios 55-58.
[9] Re McMennemin and Federal Commissioner of Taxation 2010 ATC ¶10-145 ; (2010) 53 AAR 187 at 217-218; Groth v Secretary, Department of Social Security (1995) 40 ALD 541 at 545.
[10] Boscolo v Secretary, Department of Social Security (1999) 90 FCR 531 at 535.
[11] T13 folio 69.
[12] T13 folio 68.
[13] T13 folio 65.
[14] Written submission handed up at hearing.
[15] See Re Schuurmans-Stekhoven and Commissioner of Taxation [2012] AATA 62 , for example .

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