RAWSON v FC of T

Members:
CR Walsh SM

Tribunal:
Administrative Appeals Tribunal, Perth

MEDIA NEUTRAL CITATION: [2012] AATA 322

Decision date: 25 May 2012

CR Walsh (Senior Member)

INTRODUCTION

1. Mrs Rawson seeks a review of the Commissioner's objection decision (dated 28 October 2011) to disallow Mrs Rawson's objection (dated 8 August 2011) against an excess contributions tax assessment (issued to her on 8 July 2011) in respect of the year ended 30 June 2010.

BACKGROUND

2. On 24 March 2011 the Commissioner advised Mrs Rawson that information available to him indicated that she may be liable to pay excess contributions tax for the 2010 year in respect of contributions to her superannuation fund, AMG Universal Super ( AMG ).

3. On 18 April 2011 Mrs Rawson made an application for an excess contributions tax determination under section 292-465 of the Income Tax Assessment Act 1997 ( ITAA 1997 ). Mrs Rawson requested that the Commissioner exercise his discretion in section 292-465 of the ITAA 1997 to reallocate concessional contributions of $97,127.20 from the 2010 year to the 2009 year.

4. On 29 June 2011 the Commissioner issued Mrs Rawson with a Notification of Decision in respect of the determination application. That notification states, in part:

" Question

Will the Commissioner make a written determination under section 292-465 of the ITAA 1997 to disregard or reallocate to another financial year, all or part of your concessional contributions for the 2009-10 financial year?

Answer

No. Refer to 'Reasons for our decision'."

5. The Commissioner's "Reasons for our decision" state, in part:

"Before exercising the discretion, the Commissioner must be satisfied that 'special circumstances' exist to disregard or reallocate your excess contributions and that the making of the determination is consistent with the object of Division 292 of the ITAA 1997.

The Commissioner considers that your case does not demonstrate 'special circumstances' as they are not sufficiently unusual or out of the ordinary ." [Emphasis added]

6. On 8 July 2011 the Commissioner issued Mrs Rawson with a Notice of Assessment in respect of her liability to excess contributions tax of $30,595.05 for the 2010 year.

7. On 8 August 2011 Mrs Rawson lodged an objection to the excess contributions tax assessment for the 2010 year.

8. On 28 October 2011 the Commissioner disallowed Mrs Rawson's objection.

9. On 15 November 2011 Mrs Rawson applied to the Tribunal for a review of the Commissioner's objection decision dated 28 October 2011.

ISSUES

10. It is not disputed that the superannuation contributions of $97,127.20 by Mr Rawson (Mrs Rawson's employer) to Mrs Rawson's superannuation fund, AMG, on 29 June 2009 are "concessional contributions" as defined in section 292-25(1) of the ITAA 1997.

11. The main issues for determination by the Tribunal in this application are:

  • (i) whether the concessional contributions of $97,127.20 which were paid by Mr Rawson (Mrs Rawson's employer) by BPay on 29 June 2009 to Mrs Rawson's superannuation find, AMG, but which were not received by AMG until 1 July 2009, should properly be treated as concessional contributions "made" in the year ended 30 June 2009 or in the year ended 30 June 2010: section 252-25(2) of the ITAA 1997; and
  • (ii) if Mrs Rawson's concessional contributions of $97,127.20 should properly be treated as concessional contributions "made" in the 2010 year, whether a

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    determination should be made, pursuant to the discretion in subsection 292-465(1) of the ITAA 1997, that those concessional contributions be reallocated from the year ended 2010 to the year ended 30 June 2009.

12. In deciding whether a determination should be made under 292-465(1) of the ITAA 1997, the Tribunal must determine that:

  • (a) there are "special circumstances" for the purposes of section 292-465(3)(a) of the ITAA 1997; and
  • (b) making the determination is consistent with the "object" of Division 292 (as set out in section 292-5 of the ITAA 1997): section 292-465(3)(b) of the ITAA 1997.

13. In deciding whether to make a determination, the Tribunal may have regard to the matters listed in section 292-465(5) and (6) of the ITAA 1997 and "any other relevant matters": section 292-465(4) of the ITAA 1997.

14. The Tribunal's jurisdiction to determine this issue arises under sections 292-245 and 292-465(9) of the ITAA 1997. Section 292-245 provides that a person dissatisfied with a an excess contributions tax assessment made in relation to them can object against the assessment in the manner set out in Part IVC of the Taxation Administration Act 1953 ( TAA ). Section 292-465(9) of the ITAA 1997 (which provision is set out below in paragraph 24) was inserted into the ITAA 1997 by Schedule 1 of Part 4 of the Superannuation Amendment Act 2010, effective 17 November 2010, and overcomes the effect of the decision in
McMennemin v Commissioner of Taxation 2010 ATC 10-145; [2010] AATA 573.

LAW

Legislative framework

15. Part 3-30 of the ITAA 1997 concerns the taxation of superannuation benefits. Part 3-30 was introduced into the ITAA 1997 by Tax Laws Amendment (Simplified Superannuation) Act 2007, in the 2007 financial year, as part of the Federal Government's significant amendments to the law governing the taxation of superannuation: refer to the recent decisions of the Tribunal in
Leckie v Commissioner of Taxation [2012] AATA 129 and
Naude v Commissioner of Taxation [2012] AATA 129.

16. Of the three phases of the taxation of superannuation (being contribution, investment and benefit phases outlined in Division 280 of the ITAA 1997), this application is concerned with a specific aspect of the contribution phase of the taxation of superannuation and involves "concessional contributions" (as opposed to "non-concessional contributions") to a superannuation fund.

17. The amount of a taxpayer's "concessional contributions" for a financial year is the sum of each contribution covered by section 292-25(2) of the ITAA 1997 and each amount covered by section 252-(3) of the ITAA 1997: section 292-25(1) of the ITAA 1997. Broadly, "concessional contributions" are contributions that are taxed in the superannuation plan at the concessional rate (of 15%) because the plan complies with the requirements of the Superannuation Industry (Supervision) Act 1993 and would normally include employer contributions and deductible personal contributions.

18. Complying superannuation funds are assessed on their taxable income at the rate of 15%.

Excess contributions tax

19. Division 292 of the ITAA 1997 imposes a further tax, called an "excess contributions tax", (at the rate of 31.5%) on individuals if their annual concessional contributions exceed the "concessional contributions cap" for the year: section 292-20(1) of the ITAA 1997.

20. Since a 15% tax is payable by the fund on concessional contributions received by it, the additional excess contributions tax of 31.5%, brings the tax on concessional contributions, exceeding the concessional contributions cap in the relevant year, to 46.5%.

21. For individuals aged 50 or more, a transitional concessional contributions cap of $100,000 applies for the 2009 financial year and $50,000 applies for the 2010 financial year: see section 292-20(a) of the Income Tax (Transitional Provisions) Act 1999.

22. Section 292-230(1) of the ITAA 1997 provides that the Commissioner must make an "excess contributions tax assessment" where a person has excess concessional (or non-concessional) contributions in a financial year. The Commissioner must give the person a


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notice of the excess contributions tax assessment, in writing, as soon as practicable after making the assessment: section 292-230(3) of the ITAA 1997.

Commissioner's discretion

23. Section 292-465 of the ITAA 1997 allows a taxpayer to apply to the Commissioner to make a written determination to allocate concessional contributions to another financial year, for example to prevent the concessional contributions cap being breached in a particular financial year.

24. Section 292-465 of the ITAA 1997 relevantly provides:

" Commissioner's discretion to disregard contributions etc. in relation to a financial year

  • (1) If you make an application in accordance with subsection (2), the Commissioner may make a written determination that, for the purposes of this Division:
    • (a) all or part of your concessional contributions for a financial year is to be disregarded, or allocated instead for the purposes of another financial year specified in the determination; and
    • (b) all or part of your non-concessional contributions for a financial year is to be disregarded, or allocated instead for the purposes of another financial year specified in the determination.
  • (2) You may apply to the Commissioner in the approved form for a determination under subsection (1). The application can only be made:
    • (a) after all of the contributions sought to be disregarded or reallocated have been made; and
    • (b) if you receive an excess contributions tax assessment for the financial year-before the end of:
      • (i) the period of 60 days starting on the day you receive the assessment; or
      • (ii) if the Commissioner allows a longer period-that longer period.
  • (3) The Commissioner may make the determination only if he or she considers that:
    • (e) there are special circumstances; and
    • (f) making the determination is consistent with the object of this Division.
  • (4) In making the determination the Commissioner may have regard to the matters in subsection (5) and (6) and any other relevant matters.
  • (5) The Commissioner may have regard to whether a contribution made in the relevant financial year would more appropriately be allocated towards another financial year instead.
  • (6) The Commissioner may have regard to whether it was reasonably foreseeable, when a relevant contribution was made, that you would have excess concessional contributions or excess non-concessional contributions for the relevant financial year, and in particular:
    • (g) if the relevant contribution is made in respect of you by another person-the terms of any agreement or arrangement between you and that person as to the amount and timing of the contribution; and
    • (h) the extent to which you had control over the making of the contribution.
  • (7) The Commissioner must give you a copy of the determination.
  • (8) A determination under this section may be included in a notice of assessment.

    Review of determinations

  • (9) To avoid doubt:
    • (i) you may object under section 292-245 against an excess contributions tax assessment made in relation to you on the ground that you are dissatisfied with a determination that you applied for under this section; and
    • (j) for the purposes of paragraph (e) of Schedule 1 to the Administrative Decisions (Judicial Review) Act 1977, the making of a determination under this section is a decision forming part of the

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      process of making an assessment of tax under this Act.
      "

25. Thus, section 292-465(1) of the ITAA 1997 enlivens the Commissioner's discretion to make a determination in relation to concessional contributions, upon the taxpayer making an application. Importantly, the requirements of section 292-465(3) of the ITAA 1997 are conjunctive. That is, section 292-465(3) requires that both : (a) "special circumstances" exist in relation to the taxpayer; and (b) the making of the determination is consistent with the "object" of Division 292.

Further, in making a determination under section 292-465(1) of the ITAA 1997, section 292-465(4) provides that regard may be had to the specific matters in sections 292-465(5) and (6) and "any other relevant matters". The use of the word "may" in section 292-465(4), clearly imparts a discretion on the decision-maker to refer to circumstances described in sections 292-465(5) and (6) and "any other relevant matters". In other words, regard to those matters is optional and not mandatory. In contrast, it is mandatory that the decision-maker be satisfied that both conditions in section 292-465(3) are been met before a determination can be made under section 292-465(1) of the ITAA 1997.

26. The discretionary considerations in sections 292-465(4)-(6) of the ITAA 1997 provide guidance as regards:

  • (i) the matters which might take a case outside the ordinary course and amount to "special circumstances"; and
  • (ii) matters relevant to the question whether it is consistent with the "object" of Division 292 of the ITAA 1997 that a determination be made under section 292-465(1) of the ITAA.

28. However, it can be implied from the use of the words "any other relevant matters" in section 292-465(4) of the ITAA 1997, those considerations do not limit the matters that are relevant to the above questions: cf Deputy President Forgie in Chantrell.

27. That is, it is less likely to amount to "special circumstances" and it is less likely to be consistent with the "object" of Division 292 if:

  • (i) a contribution made in a particular financial year would more appropriately be allocated towards another financial year instead (section 292-465(5)); and
  • (ii) excess contributions were reasonably foreseeable at the time the relevant contribution was made, having regard to:
    • (a) the terms of any agreement or arrangement between the taxpayer and the payer as to the amount and timing of the contribution; and
    • (b) the extent to which the taxpayer had control over the contributions (section 292-465(6)).

Special circumstances

28. As stated above, the Commissioner cannot make the determination under section 292-465(1) of the ITAA 1997 unless "special circumstances" exist.

29. The meaning of "special circumstances" has been considered by this Tribunal and the courts in many contexts, including, in particular, in the context of the social security legislation.

30. As Burchett J commented in
Minister for Community Services & Health v Chee Keong Thoo (1988) 78 ALR 307 at 324: "The core of the idea of 'special circumstances' is that there is something unusual or different takes a case outside of the ordinary course." It is relevant in determining whether special circumstances exist, that the application of the general rule leads to a result that is unfair, unreasonable or inappropriate.
Beadle v Director General or Social Security (1985) 60 ALR 225 at 228 per Bowen CJ, Fisher and Lockhart JJ.

31. The Explanatory Memorandum to the Tax Laws Amendment (Simplified Superannuation) Act 2007, which amended the ITAA 1997 to, among other things, include section 292-465 of the ITAA 1997, supports such an interpretation of the term 'special circumstances'. It provides at paragraph 1.117:

  • "1.117 The courts have considered what 'special circumstances' means in many different contexts. It is clear from the case law that special circumstances are unusual circumstances, or circumstances out of the ordinary . Whether circumstances are special will vary from case-to-case as the

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    contact required, but in this context they must make it
    unjust, unreasonable or inappropriate to impose the liability for excess contributions tax ." [Emphasis added]

32. In
Peaker v Commissioner of Taxation 2012 ATC 10-238[2012] AATA 140 at [13] Member Webb confirmed that as being the meaning of "special circumstances" and noted that the term "special circumstances" is a direction to the decision-maker that the discretion it has is not to be enlivened lightly. Importantly, in Peaker Member Webb held at [20] that ignorance of superannuation arrangements was not "special circumstances". Member Webb also noted that the information was publicly available and the applicant could have obtained it if he desired to do so. In reaching that decision Member Webb followed the earlier decision in
Schuurmans-Stekhoven v Commissioner of Taxation 12 ESL 03; [2012] AATA 62 where Senior Member McCabe made a similar finding.

33. In
AAT Case 11,379 [1996] AATA 406: (1996) 96 ATC 583; (1996) 34 ATR 1175, the Tribunal concluded that the mere fact that the applicant marginally exceeded the relevant Act's limit was not, of itself, "special circumstances", and stated at [5] to [6]:

"The term "special circumstances" has been the subject of numerous judgments and decisions in courts and tribunals. The ways in which people conduct their affairs are so numerous that legislators cannot predict, and hence allow for, every possible set of circumstances. Therefore, it is not possible, nor desirable, to attempt to codify the circumstances to be regarded as special. Each case is different to every other case and has to be treated on its merits. The point of legislation which allows for a discretion to be exercised in "special circumstances" is recognition of the fact that strict application of the legislation may be some unusual or unforeseen cases result in an unjust, unreasonable or inappropriate result : a result that the legislators did not intend.

There is no doubt that the applicant is unlucky to have fallen over the wrong side of the boundary line by such a small margin. I do not regard this fact as being special enough to invoke the desired discretion. In every piece of legislation where rights or entitlements are created there is a division between those who qualify and those who do not. Those people whose cases fall marginally one side or the other may regard themselves as either lucky or unlucky as the case may be. So be it."[Emphasis added]

34. In
Tran v Commissioner of Taxation 2012 ATC 10-236; [2012] AATA 123 Member Hughes summarises the law in relation to section 292-465(3) of the ITAA 1997 at [15] as follows:

"The consistent interpretation adopted by the courts and this Tribunal in these decisions has been that whilst each case must turn on its merits, circumstances will not be special unless they are out of the ordinary .The prime determinant is not the extent of the taxpayer's misfortune but rather the uniqueness of the events which has given rise to that misfortune. It has consistently been observed that an innocent mistake or ignorance of the law does not, in itself, constitute special circumstances ". [Emphasis added]

35. Further, Member Hughes commented at [19]: "The legislation does not contemplate special circumstances as including simple error, albeit innocent errors or other mistakes which are made in good faith" and, referring to the facts of that particular case, Member Hughes said at [21]: "...it is notable that applicant apparently chose not to consult her existing financial adviser when making the final contribution which took her over the limit".

36. In
Chantrell v Commissioner of Taxation 2012 ATC 10-242; [2012] AATA 179 Member Hughes stated at [31] to [32]:

"Unquestionably, the applicant's intention was to make the contribution in question during the 2007 financial year. The fact that even with the best of intentions this did not occur does not of itself amount to special circumstances. It was the applicant's responsibility to ensure that the steps taken to realise that intention were effective. The fact that the transfer was not effective on 30 June 2007 reflected the reality of the extent to which funds could be transferred


ATC 4736

electronically on a Saturday, specifically within the limitations of the Westpac system at the time
. The applicant chose to trust the technology or, more specifically, to speculate as to the effectiveness of the manner in which he was anticipating that the technology would operate . Every other taxpayer was faced with the same situation. These were not special circumstances unique to this applicant or this situation. It was incumbent upon the applicant to ensure that the transfer was effective .

While the effect of the circumstances on the applicant could be described as unfortunate and unforeseen, this is not sufficient to render the imposition of the excess contributions tax unjust, unreasonable or inappropriate. The applicant had a responsibility to ensure that his concessional contribution was paid into his superannuation fund on or before 30 June 2007. He thought he had discharged this responsibility but in fact he had not. It was essentially within his control to ensure that the transaction achieved his own objective."[Emphasis added]

37. In
Thommeny v Commissioner of Taxation 2006 ATC 2440; [2006] AATA 840; (2006) 64 ATR 1092, a superannuation fund erred in delaying the reporting of a benefit to the applicant. The Tribunal held the circumstances of the applicant could not be characterised as "special circumstances".

38. In
Kerr v Commissioner of Taxation 2007 ATC 2488; [2007] AATA 1732 circumstances, including incorrect advice of a financial planner, were held not to constitute "special circumstances".

Object of Division 292

39. As stated above, the Commissioner cannot make a determination under section 292-465(1) of the ITAA 1997 if he does not consider that the making the determination would be consistent with the object of Division 292 of the ITAA 1997.

40. The object of Division 292 of the ITAA 1997 is set out in section 292-5 of the ITAA 1997 as follows:

" Object of this Division

The object of this Division is to ensure that the amount of concessionally taxed superannuation benefits that a person receives results from superannuation contributions that have been made gradually over the course of the person's life."

41. The "Guide" to Division 292, which is contained in section 292-1 of the ITAA 1997, provides:

" What this Division is about

This Division limits the superannuation contributions made in a financial year for a person that receive concessionally taxed treatment."

42. As a Guide provision, section 292-1 of Division 292 of the ITAA 1997 forms part of the ITAA 1997 but is to be kept separate from its operative provisions: see section 950-150(2) of the ITAA 1997. In interpreting the operative provisions of Division of the ITAA 1997, the Guide should only be considered for limited purposes, including "determining the purpose or object underlying the provision[s]" of Division 292: see section 950-150(2)(a) of the ITAA 1997.

43. Further guidance about the object of Division 292 of the ITAA 1997 may be found in Division 280 of that Act. Division 280, titled "Guide to the Superannuation Provisions", provides a guide to Part 3-30 of the ITAA 1997. Specifically, section 280-15(1) of the ITAA 1997 provides:

"There is a limit to contributions that can be made in respect of an individual in a year that receive favourable tax treatment. This limit takes the form of a tax on excessive contributions, and neutralizes the favourable tax treatment arising from the excessive contributions."

44. In Chantrell Member Hughes considered that it would be inconsistent with the "object" of Division 292 for relief to be provided in circumstances where a taxpayer has, in effect, made a miscalculation, albeit an innocent one. In this regard, Member Hughes said at [35]:

"While the applicant undoubtedly acted in good faith, he elected to take a variety of risks inherent in leaving the transaction until the last day of the financial year. To again use the words of Senior Member


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Muller in AAT Case 11,379, the applicant has fallen over the wrong side of the boundary line for reasons which, while not immediately in his control from a technical perspective, were within his control from an organisational perspective.
"

45. The policy context of Division 292 can be discerned from the Explanatory Memorandum to the Tax Laws Amendment (Simplified Superannuation) Bill 2006 which provides at [1.11] and [1.12]:

  • "1.11 The removal of age-based deduction limits, reasonable benefit limits (RBLs) and tax on superannuation benefits from taxed funds for people 60 and over will increase the concessions provided to superannuation. These changes, in conjunction with the continuing tax exemption provided for income from superannuation assets supporting a pension, will make superannuation an attractive vehicle for retaining assets to minimise tax. There will be an incentive for people to transfer income producing assets currently held outside superannuation to the concessionally taxed superannuation system.
  • 1.12 To ensure superannuation taxation benefits are targeted appropriately, limits will be placed on the amount of superannuation contributions a person can make that receive concessional treatment .... "[Emphasis added]

46. Division 292 of the ITAA 1997 seeks to discourage excessive movement of assets into superannuation by creating a liability to pay tax on superannuation contributions exceeding annual caps. That is, imposition of an excess contributions tax on contributions that exceed a cap is an intended consequence of Division 292.

47. Further, excess concessional contributions tax has the object of limiting the revenue impact of the deductibility to the contributor of concessional contributions. Entities are entitled to a deduction for contributions they make in respect of employees or (in the case of personal contributions) themselves. This deduction is part of the concessional tax treatment of contributions provided for in Part 3-30 of the ITAA 1997. To the extent that a contribution of this kind is in excess of the applicable cap, the tax on the excess contributions neutralises the favourable tax treatment of the benefits ultimately paid.

48. The requirement of consistency with the "object" of Division 292 of the ITAA 1997 places a very significant limit on the circumstances which will warrant a determination being made under section 292-465(1) of the ITAA 1997. That is, it requires the Commissioner to assess whether, in the circumstances of a particular case, a section 292-465(1) of the ITAA 1997 determination would be consistent with the "object" of Division 292. The requirement of consistency with the "object" of Division 292 permits the Commissioner to consider whether the making of a determination in a specific case would undermine the achievement of the "object" of the Division if applied universally to applications under section 292-465(1) of the ITAA 1997.

Contribution more appropriately allocated towards another financial year

49. The first express discretionary consideration which may be taken into account is in section 292-465(5) of the ITAA 1997. It is whether a contribution made in a particular financial year would more appropriately be allocated towards another financial year instead.

50. In Chantrell Member Hughes stated at [36]:

"On the question of reallocation, it is not in contention that the applicant intended the contribution to be allocated to the 2007 financial year. However, this is not enough. As submitted by the respondent, there is no inherent connection between the contribution and the 2007 financial year other than the applicant's subjective (albeit undisputed) intention to allocate the funds to the 2007 year . The applicant's intentions were plain but they were not executed effectively."[Emphasis added]

Reasonably foreseeable when contribution was made that there would be excess contributions

51. The second express discretionary consideration which may be taken into account is in section 292-465(6) of the ITAA 1997. It is whether it was "reasonably foreseeable", when the relevant contribution was made, that the person would have excess concessional


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contributions for the relevant financial year, having regard to: (a) the terms of any agreement or arrangement between the person and the payer as to the amount and timing of the contribution; and (b) the extent to which you had control over the making of the contribution.

52. In
McMennemin v Commissioner of Taxation 2010 ATC 10-145; [2010] AATA 573 Deputy President Forgie at [111] cited
Secretary Department of Employment Education and Youth Affairs v Ferguson (1997) 76 FCR 426 at 440; [1997] FCA 663 as to the meaning of "reasonably foreseeable" as it appears in section 292-465(4) ITAA 1997 as follows:

"The use of the expression 'reasonably foreseeable ' is commonplace. It imports an objective assessment about a set of facts as they apply to a particular circumstance or to a particular person . To say that, as here, they direct attention to the particular person does not import the need to determine the actual state of mind of that person. It is to direct the objective assessment on the relevant facts in relation to a particular person, with that person's health, knowledge and background. Some persons would be able to reasonably foresee circumstances more readily than others. ..." [Emphasis added]

55. Thus, whether it was reasonably foreseeable that a person would have excess contributions is a matter of objective fact. A person's subjective understanding or misunderstanding is not relevant to the question of reasonable foreseeability.

Timing of contributions

53. The time a contribution is "made" is significant for the purposes Part 3-30 of the ITAA 1997 for a number of reasons.

54. First, it determines the income year in which the person making the contribution (the payer) may claim a deduction, if allowable, in respect of the relevant contribution. A deduction is available in respect of employer contributions and certain personal contributions under sections 290-60 and 290-150 of the ITAA 1997, but only in the income year in which the contribution is "made": see sections 290-60(3) and 290-150(3) of the ITAA 1997.

55. Second, it determines the income year in which the superannuation provider receiving the contribution must, if required, include the contribution in its assessable income: see Subdivision 295-C of the ITAA 1997. Section 295-160 provides that "The assessable income of an entity includes contributions or payments as set out in this table for the income year in which the contributions or payments are received ". In particular, a contribution to a complying superannuation fund by one person to provide superannuation benefits for another person is assessable income under Item 1 of the Table in section 295-160 of the ITAA 1997.

56. Third, and relevant for present purposes, is that it determines the financial year in which the contribution is included in a person's concessional (or non-concessional) contributions for the purposes of excess contributions tax. In this regard, section 292-25(2) of the ITAA 1997 provides that a person's concessional contributions for a financial year include contributions:

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

(3) An amount in a complying superannuation plan is covered under this subsection if it is allocated by the superannuation provider in relation to the plan for [a person] for the year in accordance with conditions specified in the regulations."[Emphasis added]

57. The importance of a taxpayer ascertaining the timing of superannuation contributions was highlighted in the Explanatory Memorandum to Tax Laws Amendment (Simplified Superannuation) Bill 2006 at [1.119]:

"When considering whether an excess is reasonably foreseeable, the Commissioner may consider the terms of any agreement or arrangement between the individual and another person where those terms affect the amount or timing of the contribution. For example, where contributions are made by


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an employer under a workplace agreement, industrial award or an effective salary sacrifice agreement the Commissioner will need to consider the terms of those agreements. The Commissioner may also consider the extent to which the individual has control over the making of the contribution
. For example, a person who is making a contribution towards the end of a financial year should ensure that the fund receives the contribution before the end of the financial year to ensure it is taken into account in that year and not the subsequent one . [Schedule 1, item 1, subsection 292-465(4)]"[Emphasis added]

58. The term "made" is not defined in the ITAA 1997 for the purposes of Division 292.

59. In Peaker and Chantrell the Tribunal held that for the purposes of Division 292 contributions are "made" when they are actually received by the superannuation fund and credited to the superannuation fund's account.

60. In Peaker Member Webb stated at [8] to [9]:

  • "8. .......concessional superannuation contributions are calculated with reference to the contributions made to complying superannuation funds, by way of assessable income. The origin of the 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 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."[Emphasis added]

61. In Chantrell Member Hughes stated at [19] to [21]:

  • "19. On the question of the timing of the contribution, the Tribunal is satisfied that the $60,000 contribution by the Chantrell Discretionary Trust cannot be regarded as having been made until 2 July 2007.
  • 20. It is instructive to refer to TR 2010/1. At paragraph 13, the Ruling includes a table which summarises the ways in which funds are typically transferred and when the contribution is deemed to have been made. In relation to electronic funds transfers to a superannuation provider, the Commissioner's practice is to deem the contribution as having been made when the funds are credited to the superannuation provider's account. In this instance, the funds were not credited to the superannuation provider's account until 2 July 2007.
  • 21. The applicant stressed that it would be illogical to ignore the fact that he did all that was possible to effect the transfer on 30 June 2007. However, it can be argued with equal persuasiveness that it would be illogical to deem a contribution to have been made until the value of the superannuation fund has increased as a consequence of the contribution having been made. The bank records, relied upon by the applicant as evidence of his intention to complete the transaction on 30 June 2007, equally constitute evidence that the transaction was not completed until 2 July 2007."

62. The Commissioner's view on when a contribution is "made" for the purposes of Division 292 of the ITAA 1997 is set out in Taxation Ruling TR 2010/1, titled "Income tax: superannuation contributions". The Commissioner's view, as stated in that Ruling, is as follows:

"4. In the superannuation context, a contribution is anything of value that increases the capital of the superannuation fund provided by a person whose purpose is


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to benefit one or more particular members of the fund or all of the fund members in general.
"

63. Further, according to TR 2010/1 at paragraph 13, where funds are transferred by an electronic transfer of funds to the superannuation provider, the funds are received when the funds are credited to the superannuation provider's account: see also paragraphs 183 to 187 of TR 2010/1.

64. Such an approach is consistent with the law relating to when a dividend is taken to have been "paid" for income tax purposes. That is, "paid" in relation to a dividend includes "credited" or "distributed": section 6(1) of the Income Tax Assessment Act 1996. Broadly, a dividend is "credited", so as to have been "paid", if a dividend has been declared, profits are appropriated to its payment and, importantly, the shareholder's account with the company is credited in such a way that it may be drawn on as and when the shareholder desires.

65. In the case of contributions of money (cash) to a superannuation fund, the superannuation provider does not commence to hold a benefit for a fund member until the cash contribution in respect of that member has been received or made available to the fund provider by way of an increase in the capital of the fund and an immediate right to the cash: cf Case 1/97 97 ATC 101 where the Tribunal found that, at the time the relevant salary payments were electronically transferred they were constructively derived by the taxpayer as they were dealt with on his behalf or as he directed.

66. See also Halsbury's Laws of Australia 45 Banking and Finance in Australia (2) which states at [45-690]:

"If the transfer is made through an electronic funds transfer system or other [electronic banking] system which is governed by inter-bank rules as to the time of settlement, those rules may be relevant to the time of completion of the payment to the extent that they affect the time at which the payee has an unconditional right to the immediate use of the funds."

67. As set out above, NAB's Terms and Conditions of BPay payments provide, among other things, that billers who participate in the BPay Scheme have agreed that a BPay payment will normally be treated as "received" by the biller to whom it is directed on the next business day if the bank is told to make a BPay payment after the bank's cut-off time for BPay payments on a banking business day or on a non-banking business day. However, a delay of up to two banking business day may occur in the processing of a BPay payment where NAB is told to make the BPay payment after the bank's cut-off time for BPay payments, being after 6.30pm AEST/AEDT: see also paragraphs 185 and 186 of TR 2010/1.

Onus on the Applicant

68. Section 14ZZK(b)(i) of the TAA provides:

"On an application for review of a reviewable decision he applicant has the burden of proving that if the taxation decision concerned is an assessment (other than a franking assessment) - the assessment is excessive."

69. Accordingly, Mrs Rawson bears the onus of proving that her excess contributions tax assessment is excessive. To discharge this onus, Mrs Rawson must establish the necessary facts and explain why the assessment is excessive, and further, what the assessment should be: see
Leckie v Commissioner of Taxation [2012] AATA 129 at [21].

FACTS AND EVIDENCE

70. Mrs Rawson's date of birth is 10 July 1954. On the last day of the years ended 30 June 2009 ( 2009 year ) and 30 June 2010 ( 2010 year ) Mrs Rawson was over 50 years of age.

71. Mrs Rawson's husband, Mr David Rawson, carries on business as a sole trader in the name of Bike Doctor Motorcycle Repairs & Bike Tyre City ( Bike Doctor ).

72. During the 2009 and 2010 years Mrs Rawson was employed by Mr Rawson as a secretary at the Bike Doctor.

73. During the 2009 and 2010 years Mrs Rawson was a member of AMG. The trustee of AMG is Trust Company Superannuation Services Limited (formerly the Trust Company (Superannuation) Ltd).

The BPay payment initiated on 29 June 2009

74. The superannuation contribution central to this application was initiated by Mr Rawson


ATC 4741

(Mrs Rawson's husband and employer) on Monday, 29 June 2009. The contribution was made to AMG by a two-step process being placed through RBS Morgans Limited ( RBSM ), stockbrokers and financial planners. RBSM changed its name from ABN AMRO Morgans in September 2009. Mrs Rawson's advisor in respect of her investments in AMG was Mr Murray Rogers, a Senior Client Advisor and Authorised Representative of RBSM.

75. Late on the morning of Monday, 29 June 2009, Mr Rawson telephoned Mr Rogers. Mr Rawson informed Mr Rogers that he intended to make a superannuation contribution of $97,127.20 to AMG for Mrs Rawson. Mr Rawson stated that he was aware that the contribution needed to be made by him (as Mrs Rawson's employer) before 30 June 2009 to ensure that his business, the Bike Doctor, was entitled to an income tax deduction for the contribution in the year ended 30 June 2009.

76. Mr Rogers' Witness Statement (dated 5 March 2012) states at paragraph 4:

"I advised Mr Rawson to make the transaction by way of a direct bank transfer as this would ensure the funds were received by close of business on June 30. Mr Rawson advised that he wished to BPay the amount as his bank did not allow him to transfer large sums to other banks. I expressed my concern over this and advised that there may not be sufficient time for the banks to facilitate the transfer."

77. Mr Rawson gave evidence before the Tribunal that he denies being warned by Mr Rogers regarding the use of BPay for the $97,127.20 contribution. Mr Rogers gave verbal evidence that he did warn Mr Rawson regarding the use of BPay to make the contribution concerned and that he checked on 2 July 2009 to see that the contribution had gone through to Mrs Rawson's superannuation fund, AMG, by 30 June 2009. The fact that he made the inquiry that he did on 2 July 2009 is in the Tribunal's opinion consistent with the fact that he was concerned about Mr Rawson using BPay to make the contribution and that he did in fact warn him about the use of BPay prior to the transfer being initiated.

78. The amount of $97,127.20 was transferred by Mr Rawson to AMG as follows:

  • • On Monday, 29 June 2009 the opening balance of the NAB account in the joint names of Mr and Mrs Rawson (BSB 086-288 Account Number 58-596-8892) ( Joint NAB Account ) was $23,779.71. On this day the balance of the account was increased via an internet transfer, described as "funds transfer", of $120,000, a cash and/or cheques deposit of $3,000.25 and an internet BPay payment of $4,088.00.
  • • Various payments were deducted from the Joint NAB Account by way of internet transfers on that day. The closing balance of the Joint NAB Account on Monday 29 June 2009 was $129,191.67.
  • • On Monday 29 June 2009, at 7.21 pm, Mr Rawson initiated a BPay payment of $97,127.20 from the Joint NAB Account to Biller name "AMG Universal Super - Bernie", Biller code 0000006197, Customer reference number 5074638, being an RBSN trust account with the ANZ Bank. The BPay details used had been saved from previous transfers effected by Mr Rawson.
  • • A NAB statement for the Joint NAB Account (for the period starting 30 May 2009 and ending 30 June 2009) shows the amount of $97,127.20 debited from the Joint NAB Account on 30 June 2009. The recipient is described as "ABN AMRO Morgans". The BPay transaction took effect on 30 June 2009 because it was initiated after the standard payment deadline of 6.30 pm AEST.
  • • The $97,127.20 payment to RBSM can be traced into the ANZ bank account of RBSM as being made on Tuesday 30 June 2009 at 8.30pm. BPay deposits of $156,559.37 and $2,121,939.64 (totalling $2,278,499.01) were made into an RBSM trust account with the ANZ Bank (BSB 014002 account number 775451376). The $97,127.20 payment was included in the deposit of $2,121,030.64.
  • • On Wednesday, 1 July 2009 at 7.53 am, a BPay file was downloaded from ANZ Online and $97,127.20 was allocated to "Account 507463". An extract from an RBSM document headed "The Trust Company (Superannuation) Ltd (507463)" shows that "Account 507463" is Mrs

    ATC 4742

    Rawson's account with Trust Company (Superannuation) Ltd as trustee of AMG.
  • • On Wednesday 1 July 2009 at 1.29 pm, $97,127.20 was deposited into Mrs Rawson's DDH Graham "Account 32786". DDH Graham is the investment manager and sponsor of AMG.

Other relevant contributions

79. During the 2009 year Mr Rawson made superannuation contributions for Mrs Rawson, using the same BPay details he used for the contribution of $97,127.20 he initiated on 29 June 2009, as follows:

BPay date Receipt date Amount
Wednesday 1 October 2008 at 03:57:35 2 October 2008 $957.60
Thursday 22 January 2009 at 05:57:45 23 January 2009 $957.60
Tuesday 14 April 2009 at 04:10:58 15 April 2009 $957.60
Total $2,872.80

80. During the 2010 year Mr Rawson made superannuation contributions for Mrs Rawson, using the same BPay details, as follows:

BPay date Receipt date Amount
Monday 29 June 2009 at 19:21:48 1 July 2009 $97,127.20
Wednesday 21 October 2009 22 October 2009 $957.60
Monday 18 January 2010 19 January 2010 $820.80
Sunday 13 June 2010 16 June 2010 $48,221.60
Total $147,127.20

Reporting of the contributions by AMG

81. On 29 September 2010 AMG reported an employer contributed amount of $147,127.20 for the 2010 year.

82. According to the Commissioner, Mr Rawson deducted each of the relevant contributions from the business income of his business, the Bike Doctor, in the income years ended 30 June 2009 and 30 June 2010 as contributions made for employees of that business.

NAB Terms and Conditions for BPay Payments

83. NAB issued a "Product Disclosure Statement" ( PDS ), effective 7 November 2005, including Terms and Conditions for BPay payments. The content of this PDS was also available electronically on the NAB website at www.nab.com.au on or around 29 June 2009. The terms and conditions for the BPay scheme commence at paragraph 44 of the PDS. Paragraph 44.5 provides:

"..........

  • (c) Subject to clause 44.8, billers who participate in the BPay Scheme have agreed that a BPay Payment you make will be treated as received by the biller to whom it is directed:
    • (i) on the date that BPay Payment is made, if the National is told to make the BPay Payment before the National's cut-off time for BPay Payments on a banking business day ; or
    • (ii) on the next banking business day , if the National is told to make a BPay Payment after the National's cut-off time for BPay Payments on a banking business day , or on a non- banking business day .
  • (k) A delay might occur in the processing of a BPay Payment where:
    • (i) there is a public or bank holiday on the day after the National is told to make a BPay Payment ;
    • (ii) the National is told to make a BPay Payment either on a day which is not a banking business day or after the National's cut-off time for BPay Payments on a banking business day ;
    • (iii) another financial institution participating in the BPay Scheme does not comply with its obligations under the BPay Scheme; or
    • (iv) a biller fails to comply with its obligations under the BPay Scheme.
  • (l) While it is expected that any delay in processing for any reason set out in clause 44.5(d) will not continue for more than 1 banking business day , any such delay may continue for a longer period.

"

84. Paragraph 44.8 of the PDS provides as follows:

"There are cut-off times and processing times for biller payments. Please refer to the FAQs section at national.com.au for further details".

85. The screen print of "Bill Payments - BPay View" from www.nab.com.au, as at 29 June 2009, states:

"How many days does it take for a payment to reach the biller ?

If you pay a biller before the specified cut-off time, the payment will generally reach the biller on the next business day.

If you pay the bill after the specified cut-off time, the payment will generally reach the biller in two (2) business days.

Please refer to the online Help function of NAB Internet Banking for more detailed information."

86. The screen print of "Cut-off times - bill payments (one off)" from www.nab.com.au as at 29 June 2009, states:

"If you are submitting a bill payment instruction on...

A business day before 6.30 pm (AEST/AEDT) The Biller will receive the funds (in most cases) ...the next business day

A business day after 6.30pm (AEST/AEDT) The Biller will receive the funds (in most cases) ...within 2 business days."

ANALYSIS

Timing of Mrs Rawson's concessional contributions

87. As stated above, a concessional contribution of $97,127.20 was initiated by BPay by Mr Rawson (Mrs Rawson's employer) on 29 June 2009 to Mrs Rawson's superannuation find, AMG, but was not received by AMG until 1 July 2009. This raises the issue of whether that concessional contribution should properly be treated as having been "made" in the year ended 30 June 2009 or in the year ended 30 June 2010 for the purposes of section 292-25(2) of the ITAA 1997.

88. The Tribunal agrees with the approach of taken by the Tribunal in the recent cases of Peaker and Chantrell, namely that superannuation contributions are "made" when they are actually received by the superannuation fund and credited to the superannuation fund's account. Such an approach would seem consistent with the legislative framework of Part 3-30 of the ITAA 1997 generally, as well with the law on when dividend has been "paid" for income tax purposes, Australian banking and finance law and practices and with the Commissioner's views as set out in TR 2010/1: refer to paragraphs 53 to 67 above.

89. Mrs Rawson was aged 50 years or over on both 30 June 2009 and 30 June 2010. Her concessional contributions cap for the 2009 year was $100,000 and for the 2010 year was $50,000: section 292-20 of the Income Tax (Transitional Provisions) Act 1997.

90. Accordingly, in the 2010 year, employer concessional contributions of $147,127.20 were made in respect of Mrs Rawson. Mrs Rawson's excess concessional contributions for the 2010 year were $97,127.20.

Special circumstances

91. Mrs Rawson's case is not attended by "special circumstances" within the meaning of section 292-465(3)(a) ITAA 1997 as it has consistently been interpreted by the Courts and the Tribunal. In particular, this case is indistinguishable from Chantrell. The mere fact that a transfer of funds, initiated (in this case) effectively on the last business day of the financial year (given it was made after the cut off time on 29 June), but was not credited to AMG until the following business day is not in any way unusual or out of the ordinary:
Minister for Community Services & Health v Chee Keong Thoo, Beadle, Tran, Chantrell, Thommeny, Kerr and Peaker.

92. Ignorance on the part of Mrs Rawson or Mr Rawson of NAB's banking practice, including ignorance of the mechanism by which funds are paid into an RSBM trust account before being transferred to AMG, is not a


ATC 4744

"special circumstance": Tran, Chantrell and Peaker.

93. Although it is clear that Mr Rawson 'intended' to make the contribution in the 2009 year in order to claim the income tax deduction, he failed to undertake the steps necessary to ensure it was "received" by AMG in the 2009 year. Further, it appears that he may not have been able to make the relevant contribution earlier as the joint NAB account did not contain sufficient funds to make a contribution of the relevant amount until 29 June 2009.

94. In her Statement of Facts, Issues and Contentions, dated 8 March 2012, Mrs Rawson contends (at [42]): "This unusualness is the fact that the Applicant's employer [Mr Rawson] was not informed that the bank account details he had been given were not directly linked to the Applicant's superannuation fund".

95. According to the evidence given by Mr Rogers, Mrs Rawson's financial advisor, he advised Mr Rawson late in the morning of 29 June 2009 that there may not be sufficient time for the banks to facilitate the transfer of funds to AMG (Mrs Rawson's superannuation fund) on or before 30 June 2009 if the transfer was done by way of BPay. Mr Rawson denied being warned by Mr Rogers about the use of BPay to effect the contribution and claimed that he was not informed by Mr Rogers that the BPay details he had been given were not directly linked to Mrs Rawson's superannuation fund (AMG) account. In relation to whether Mr Rogers did in fact warn Mr Rawson regarding the use of BPay, the Tribunal accepts the evidence of Mr Rogers. Mr Rogers is a Senior Client Advisor and Authorised Representative of RBSM and his evidence that he did warn Mr Rawson regarding the use of BPay is consistent with his evidence that he checked on 2 July 2009 to see if the contribution had been received by AMG by 30 June 2009 as he was concerned that it would not have been as a result of having been paid by BPay. Mr Rawson, in contrast, is by his own admission a very busy small business owner who does not ordinarily look into the details of transactions.

96. According to Mr Rawson, his understanding was that there was "something to be done". That is, there was something that Mr Rogers had to do to effect the transfer. The facts are that Mr Rawson chose to use BPay to make the payment, and did not initiate the BPay transaction until 7.21pm that evening. In these circumstances, whether or not Mr Rawson was informed by Mrs Rawson's financial adviser (Mr Rogers) that the BPay details he had been given were not directly linked to AMG, Mr Rawson was advised how to ensure the payment would be received by AMG on or before 30 June 2009 and did not follow that advice. For that reason, any failure by the financial planner to inform Mrs Rawson or Mr Rawson that the details he had been given were not directly linked to AMG cannot be said to constitute "special circumstances" for section 292-465(3)(a) purposes: Kerr, Chantrell, Tran and Peaker.

97. In any event, even if Mrs Rawson and Mr Rawson had not been informed by Mr Rogers (or AMG) about the precise arrangements by which contributions are received into the fund, and as to the time that could be taken for monies to be received by the fund, the cases referred to above establish that does not constitute "special circumstances".

98. A further difficulty with Mrs Rawson's contention is that there is no evidence of any obligation on Mrs Rawson's' employer (Mr Rawson) to make the payment during the 2009 year. While it may have been Mr Rawson's subjective intention to make the payment on or before 30 June 2009, there are no "special circumstances" in relation to Mrs Rawson having excess superannuation contributions just because her employer (Mr Rawson), through ignorance that the BPay details he used were not directly linked to AMG, failed to ensure the payment was received by Mrs Rawson's superannuation fund before 30 June 2009: Peaker, Tran, Chantrell, Thommeny and Kerr.

99. Mr Rawson chose to make the contribution in the particular way it was made, using the BPay reference number that directed the money to an account of RBSM and relied upon RBSM to transfer the money to AMG. These were the circumstances in which he placed himself and Mrs Rawson. They do not constitute "special circumstances": Chee Keong Thoo, Beadle, Peaker, AAT Case 11,379, Tran, Chantrell, Thommeny and Kerr.


ATC 4745

Object of Division 292

100. It would not be consistent with the "object" of Division 292 to make a determination under section 292-465(1) in Mrs Rawson's circumstances. Mr Rawson did not initiate the relevant BPay payment until the penultimate working day of the 2009 year, but after the NAB cut-off time, so that effectively it became the last working day. Mrs Rawson failed to identify, or ignored, the fact that the contribution was made on 1 July 2009 and proceeded to make further concessional contributions in the 2010 year in respect of Mrs Rawson, all of which were excess contributions as the cap for the year had already been exceeded. The "object" of Division 292 would not be fulfilled if contributions exceeding the caps were not effectively discouraged where there are no unusual or out of the ordinary circumstances which would lead to a result that is unfair, unjust, unreasonable or inappropriate: Chantrell and see paragraphs 39 to 48 above.

101. Further, it would be inconsistent with the "object" of the Division 292 if the contributions in this case were to be reallocated from the 2010 year to the 2009 year to take advantage of the concessional contribution cap 'after the event' simply because Mrs Rawson's employer (Mr Rawson) failed to properly organise for the payments to be received by Mrs Rawson's' superannuation fund in the 2009 year: Chantrell. In this sense, this case is indistinguishable from Chantrell.

Contribution more appropriately allocated towards another financial year

102. It is more likely to be consistent with the "object" of Division 292 of the ITAA 1997 to make the determination if a contribution made in the relevant financial year would more appropriately be allocated towards another financial year instead. However, that a contribution was "intended" to be made in one financial year is not sufficient to establish that it is more appropriately allocated towards that financial year: Chantrell.

103. The same circumstances apply in this case as in Chantrell (except that on the evidence any subjective intention is that of Mr Rawson, Mrs Rawson's, and not that of Mrs Rawson herself). That is, just because Mr Rawson intended to make the contribution in the 2009 year in order to claim the income tax deduction year it does not follow that the contribution would be more appropriately allocated towards the 2009 financial year: Chantrell. Other than the subjective intention of Mr Rawson that the contribution is made in the 2009 year in order that his business, the Bike Doctor, obtain a tax deduction, the contribution has no other relevant connection to the 2009 year.

Reasonably foreseeable that contribution would result in excess contributions

104. Given the way Mr Rawson chose to make the contribution (that is by BPay and via RBSM) and the terms of the NAB conditions for BPay payments it was, viewed objectively, "reasonably foreseeable" when Mr Rawson initiated the payment from the NAB bank account at 7.21 pm on 29 June 2009 that the contribution would not be received by AMG by 30 June 2009: McMennemin. The contribution having been received by AMG on 1 July 2009, it was certainly foreseeable that all further contributions made in the 2010 year would exceed Mrs Rawson's concessional contributions cap for that year. This is supported by the following facts:

  • • The payment to RBSM was made after the cut-off time on 29 June 2009 (being 6.30pm AEST). This effectively meant that the payment to RBSM could not be initiated until 30 June 2009, the final day of the 2009 year. It was reasonably foreseeable that this would be the consequence of initiating a payment late in the day, as is made clear in the NAB terms and conditions. It was also reasonably foreseeable that there would be a delay of at least a further day, before a payment could be made from RBSM to AMG;
  • • The BPay details used did not link directly with AMG but rather with an RBSM trust account. Mr Rawson was not aware of this fact. Based on Mr Roger's evidence, Mr Rogers was himself apparently unaware of this fact at that time. Nevertheless, Mr Rogers did express concern that there may not be sufficient time to transfer the funds by 30 June 2009. Despite this warning, given late on the morning of 29 June 2009, Mr Rawson failed to initiate the transfer

    ATC 4746

    until after the cut-off time for internet banking.

105. Further, it was reasonably foreseeable when subsequent contributions were made that they were excess concessional contributions. That could have been discovered by obtaining details of the dates the earlier contributions had been received. Indeed Mrs Rawson's financial planner discussed with Mr Rawson at some point the fact that the $97,127.20 contribution was received by the superannuation fund on 1 July. That is, it was objectively foreseeable when contributions were made on 21 October 2009, 18 January 2010 and 13 June 2010 that those contributions would cause Mrs Rawson to further exceed her concessional contributions cap.

106. Because the test of reasonable foreseeability is objective, the fact that Mr Rawson and not Mrs Rawson instigated the relevant transactions does not alter the relevance or weight of the above findings: McMennemin.

Terms of any agreement

107. There is no evidence in this case of any agreement or arrangement which regulated the amount or timing of Mrs Rawson's superannuation contributions to AMG. Further, there is no evidence of any contractual obligation on the part of Mr Rawson to make a particular contribution in respect of Mrs Rawson in relation to a particular year. The amount and timing of the contribution appear to have been entirely at the discretion of Mr Rawson (Mrs Rawson's employer). Consequently, Mrs Rawson had no reasonable expectation that contributions would be made in the 2009 financial year.

Mrs Rawson's control over the making of the contributions

108. Where excess contributions result from factors within a person's control, it is less likely to be consistent with the "object" of Division 292 to disregard or reallocate the excess contributions. In this case, the relevant factors are as follows:

  • • The contributions were made by Mrs Rawson's husband, Mr Rawson;
  • • The contributions were made from a joint bank account of Mrs Rawson and her husband; and
  • • Mrs Rawson is a secretary in her husband's small business, the Bike Doctor.

109. This is not a case of an arm's length employer acting entirely independently of the employee. The obvious inference in such circumstances is that Mrs Rawson could have prevented the BPay transfer from being made on the evening of 29 June 2009, or ensured that her husband made it earlier. That is, the contributions were made by Mr Rawson in his capacity as the employer of Mrs Rawson. However as Mrs Rawson was both the spouse of Mr Rawson and joint holder with him of the NAB account from which the contributions were made she was in a position to be able to at least influence, if not actually control, the contribution made. As such, Mrs Rawson:

  • • Had the potential to control what contributions would be made for her and when they would be made; and
  • • Could have ensured no further contributions were made in the 2010 after the July 1 2009 contribution caused the cap to be exceeded.

DECISION

110. For the above reasons, the Tribunal affirms the Commissioner's objection decision dated 28 October 2011.


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