R Deutsch DP

Administrative Appeals Tribunal, Sydney


Decision date: 29 May 2014

R Deutsch (Deputy President)

29 May 2014



1. This case involves an application by the Applicant to have the Respondent exercise the discretionary power conferred on him by s 292 - 465(1)(b) of the Income Tax Assessment Act 1997 (the 1997 Tax Act) to disregard or allocate to another financial year some or all of the Applicant's non-concessional contributions for the 2008-09 and 2009-10 financial years.

2. Importantly, at all times during the 2008-09 and 2009-10 financial years the Applicant was more than 60 but less than 65 years of age.

The Funds Flow

3. On 30 April 2009 the Applicant received a statement of advice from an individual representing a company referred to as High Net Worth Financial Advising Pty Ltd in which a recommendation was made that the Applicant invest $400,000 into Colonial First State Personal Superannuation. As part of that advice, it was also recommended that reviews be conducted of the Applicant's affairs on a regular basis by a dedicated adviser.

4. Following that advice, on or about 6 May 2009, the Applicant made a $400,000 personal superannuation contribution to Colonial First State Personal Superannuation. This was a non-concessional contribution as that term is defined in the relevant income tax law.

5. The Applicant's non-concessional contributions cap for the 2008-09 financial year was $450,000 arising largely from what is loosely described as the "bring-forward" provisions found in s 292-85(3) of the 1997 Tax Act.

6. On or about 14 July 2009, the Applicant withdrew $200,589.49 from Colonial First State Personal Superannuation and invested that money in her personal name in her personal capacity in a Bankwest term deposit.

7. On 3 August 2009, the Applicant received a further statement of advice from High Net Worth Financial Advising Pty Ltd and it appears that, as a result of that further advice, at some time in August 2009, the Applicant's then existing Colonial First State Personal Superannuation was rolled over from a retail to a wholesale fund in an apparent attempt to reduce management fees. The rolled over amount appears to have been somewhere in the order of $217,000 and this was moved from Colonial First State Personal Superannuation into Colonial First State Wholesale Personal Superannuation.

8. On 4 December 2009 the Applicant established a self-managed superannuation fund ("SMSF") of which the trustees were the Applicant and her mother. The Applicant was at all times the only member of the SMSF. It appears that the Applicant engaged Citibank on 17 February 2010 and, in accordance with the Applicant's instructions, Citibank opened an Ultimate Business Saver Account and a Citibank Money Market Term Deposit both in the name of the SMSF. It appears that at or about the same time Citibank also opened an MLA six-month structured deposit linked to gold in the Applicant's name and an amount of $25,000 was deposited into that account.

9. On or around 17 and 18 February 2010, the Applicant paid amounts of $155,000 and $50,000 from a personal bank account at BankWest to the Citibank accounts opened in the name of her SMSF. These payments were personal superannuation contributions received by the superannuation fund in respect of the Applicant for the year 2009-10.

10. The Applicant deducted $23,905 of the $205,000 personal superannuation contributions made in the 2009-10 income year. Thus, the amount of her non--concessional contributions for the 2009-10 financial year ("the Citibank Contribution") is $181,095 (being $205,000 minus $23,905).

11. Accordingly the Applicant was taken to have exceeded her non-concessional contributions cap for the 2009-10 financial year of $50,000 by $131,095 (i.e. $400,000 plus $181,095 minus $450,000).

12. On or about 19 February 2010, the Applicant sought advice from Citibank in relation to how to invest the funds held in the SMSF. A meeting took place between the Applicant and Citibank on 20 March 2010, and the advice provided by Citibank to the Applicant in relation to the SMSF is said to be contained in a 'detailed' Statement of Advice apparently provided to the Applicant. That advice has never been produced and its location is unknown.

13. On 31 March 2010, the Applicant rolled over her benefits in the CFS Wholesale Fund to the 'Superwrap - Personal Super Plan' - a Citibank superannuation product. The rollover closed the Applicant's CFS Wholesale Fund account.

The Respondent's Excess Contributions Tax Letter

14. On 26 May 2012 the Respondent wrote to the Applicant and advised her that the non-concessional contributions cap for the financial year ended 30 June 2010 had been exceeded by the sum of $131,095.00.

15. On 11 June 2012, the Applicant made an application requesting the Respondent make a written determination under s 292-465(1)(b) to disregard part of her non-concessional contributions for the financial year ending 30 June 2010.

The Assessment and Commissioner's Refusal to Make a Written Determination, and Ms Thompson's Objection

16. On 13 July 2012, the Respondent advised the Applicant that he would not make a written determination disregarding $131,095.00 of the non-concessional contributions made in the financial year ending 30 June 2010.

17. On 9 October 2012, the Respondent issued a Notice of Assessment assessing the Applicant with excess non-concessional contributions tax in the amount of $60,959.15 for the financial year ended 30 June 2010. On 18 October 2012 the Applicant completed a Compulsory Release Authority authorizing the withdrawal of $60,959.15 from the SMSF and its payment to the ATO.

18. On 17 October 2012, the Applicant objected to the excess contributions tax assessment, on the primary ground that she was dissatisfied with the Respondent's refusal to make a written determination under s 292-465(1)(b).

19. On 8 February 2012, the Respondent disallowed the Applicant's objection. By Application for Review of Decision filed 15 March 2013, the Applicant seeks a review of the Respondent's decision.


20. At issue is whether the Respondent's decision to refuse to make a written determination under s 292-465(1)(b) disregarding the Applicant's excess non-concessional contributions for the financial year ended 30 June 2010 should have been made differently.

21. In considering that issue, the statutory question in s 292-465(3) is to be asked in the context of those contributions that give rise to the excess contributions tax assessment. Thus, in this case, the relevant payments are the two payments of $155,000 and $50,000 made on or around 17 and 18 February 2010, of which $181,095 in total was treated as non-concessional contributions. It was these payments that actually gave rise to the excess contributions and it is therefore these payments that need to be considered in the context of s 292-465(3). The circumstances relating to contributions made in earlier years can only be considered to the extent that they have some 'relevant relationship' with the circumstances that gave rise to the excess contributions. Thus, the earlier payment of $400,000 is only relevant in this sense. This approach is referred to and endorsed in the decision of Greenwood J did in
Commissioner of Taxation v Dowling [2014] FCA 252.


22. Division 292 of the ITAA 1997 is concerned with excess contributions tax. Its object, expressed in s 292-5, is:

(T)o 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.

23. Similarly, s 292-1, headed 'What this Division is about', provides that the Division 'limits the superannuation contributions made in a financial year for a person that receives concessionally taxed treatment.'

24. The object of div 292 is fulfilled, in part, by placing limits on the amount of concessional contributions and non-concessional contributions that can be made. This limit takes the form of a tax on excessive contributions, which neutralises the favourable tax treatment of the benefits that would otherwise accrue to a member, arising from the excessive contributions.

25. Thus, section 292-80 provides that:

You are liable to pay excess non-concessional contributions tax imposed by the Superannuation (Excess Non-Concessional Contributions Tax) Act 2007 if you have *excess non-concessional contributions for a financial year.

Note: The amount of the tax is set out in that Act.

26. A taxpayer has excess non-concessional contributions for a financial year if the individual's non-concessional contributions for that particular financial year exceed the cap set out in s 292-85. In the financial year ended 30 June 2010, the Applicant exceeded the non-concessional contributions cap set for her under the "bring forward" provision by $131,095.00.

27. Parliament recognised that in special circumstances the imposition of a liability to pay excess contributions tax might produce an 'unjust, unreasonable or inappropriate result'. Accordingly, s 292-465(1)(b) was enacted to confer on the Commissioner an important discretion - a discretion to make a written determination to disregard all or part of a person's non-concessional contributions, or to reallocate all or part of a person's non-concessional contributions from one financial year to another.

28. In these proceedings, the Applicant seeks the discretion conferred by s 292-465(1)(b) to be exercised so as to disregard her excess non-concessional contributions of $131,095.00, thereby eliminating her liability to pay excess contributions tax under s 292-80.

29. The discretion conferred by s 292-465(1)(b) is not however unfettered. As Greenwood J observed in Dowling:

The Commissioner's power to exercise the discretion is constrained, at the threshold, by the mandatory requirement that he or she "considers" that there are "special circumstances" warranting a constructive change to the actuality of the contributions either by disregarding or reallocating some or all of those contributions giving rise to the liability, and that he or she considers that doing so is consistent with the object of Div 292.

The conditions contained in ss 292-465(3)(a) and (b) are absolute pre-conditions to the exercise of the discretion.

30. And later he added:

Once the Tribunal is satisfied of the pre-conditions under s 292-465(3)(a) and (b), the question arose of whether the Tribunal ought to exercise the discretion and that matter gave rise to a consideration of the s 292-465(5) and X factors and any other factor the Tribunal regarded as a relevant matter.

31. Section 292-465(3) to X provides:

  • (3) The Commissioner may make the determination only if he or she considers that:
    • (a) there are special circumstances; and
    • (b) 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 subsections (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:
    • (a) 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
    • (b) the extent to which you had control over the making of the contribution.

32. Thus, there are two critical matters to consider here. First, whether there were special circumstances and, secondly, whether the exercise of the discretion in favour of the Applicant would be consistent with the object of the Division. If the answer to either question is no, the Application must fail.


33. "Special circumstances" is a phrase which requires that there be something unusual or different 'to take the matter out of the ordinary course.' This would appear to be at the heart of what was said by Kiefel J in
Groth v Secretary, Department of Social Security [1995] FCA 1708 in relation to the expression:

The phrase "special circumstances", it has been said, although imprecise is sufficiently understood not to require judicial gloss, and for present purposes it is sufficient to observe that it would require something to distinguish Mr Groth's case from others, to take it out of the usual or ordinary case ... It would of course follow that if one were to conclude that something unfair, unintended or unjust had occurred that there must be some feature out of the ordinary.

34. In the context of superannuation and tax, this comment was cited with approval by Deputy President Forgie in
Re McMennemin and Commissioner of Taxation [2010] AATA 573.

35. On the other hand, while there must be something 'unusual' or 'uncommon', for circumstances to be 'special', some care must be taken not to overstate the test. As Besanko J said in
Angelakos v Secretary, Department of Employment and Workplace Relations [2007] FCA 25:

It was not the intention of Parliament to confine the exercise of the discretion to an exceptional case. There is less risk of overstatement if the words "unusual" or "uncommon" are emphasised. Those words indicate, correctly in my view, the fact that there must be something that distinguishes the case from the ordinary or usual case.

36. Fundamentally, it is the correct balance between these two positions that needs to be accommodated in instances such as the present case.


37. Although not put in exactly this form, it appears to me, after a careful review of the Applicant's verbal arguments at the hearing, that the Applicant's argument is that there were three "special circumstances" in this case:

  • • that the amount of $205,000 contributed on or around 17 and 18 February 2010 was effectively part of the amount of $400,000 which had previously been contributed on 30 April 2009, and it should therefore not be counted twice ( "the same money contention");
  • • that she had been given incorrect advice ( "the incorrect advice contention"); and
  • • that she was subject to difficult personal circumstances ("the personal circumstances contention").

The 'Same Money' Contention

38. The Applicant contends that her excess non-concessional contributions ought to be disregarded because they were part of, as she puts it, the 'same money ... rolling around in the tin'.

39. In response to this contention, it needs to be pointed out that by law the Citibank Contribution was by itself a non-concessional superannuation contribution made by the Applicant. On any definition it was not a rollover and it could not be treated as one in its effect.

40. In this context it is worth noting the following important points.

41. The Applicant made a deliberate, voluntary choice to cash in $200,589.49 of her superannuation benefits in the CFS Fund and deposit that amount into a personal Bankwest account. Having satisfied a condition for release she was entitled to do so, and her reasons for doing so are largely irrelevant. There is nothing particularly unusual or in any way "special" about the Applicant electing to cash in some of her superannuation benefits.

42. In cashing in $200,589.49 of her superannuation benefits, the Applicant enjoyed the concessional tax treatment the superannuation scheme was intended to provide. She was free at that point to do whatever she chose to do with that money. The fact that she chose to reinvest what appears to be that amount plus some other funds into her SMSF is a matter for her. It cannot however be said on any basis to be in effect, 'the same money'. Here an amount was withdrawn from her superannuation and placed into a personal account. A sum was then withdrawn from her personal account and paid back into her superannuation, albeit into a different account. At this second stage it was a new non-concessional contribution made by the Applicant and could not be described as the same amount as that which originally went into superannuation.

43. Finally, superannuation does not create some sort of account for a taxpayer, from which they are free to withdraw and deposit money. Section 292-465(1)(b) was intended to give some relief to a taxpayer when the scheme of div 292 in its operation itself gives rise to an unreasonable' or 'unjust' result. The section was not intended to bail out a taxpayer who, having cashed in their superannuation benefits, acts under an assumption that they can just deposit those cashed in benefits back into the superannuation system.

The Incorrect Advice Contention

44. The Applicant contended that she received incorrect advice in relation to the Citibank Contribution and this in and of itself amounts to a special circumstance.

45. In regard to this contention there are also a number of important matters of relevance.

46. First, I am not convinced that the Applicant received incorrect advice from Citibank in relation to the making of the Citibank Contribution. Her complaint in that respect rests upon unsubstantiated assertions and unreliable hearsay.

47. Secondly, even if there was substance to her allegations, there is nothing "special" in having received incorrect advice. In that respect, the Applicant's appropriate potential remedy is with the Financial Ombudsman Service.

48. Thirdly, there is an argument that rather than as a consequence of incorrect advice, the Citibank Contribution was made as a result of her own wrong assumptions and ignorance of the law, neither of which gives rise to anything "special."

49. Finally, I simply note that there were occasions on which the Applicant appears to have been put on notice in writing that her non-concessional caps may be in jeopardy of being exceeded if further contributions were made, and this advice appears to have gone largely unheeded.

The Personal Circumstances Contention

50. The Applicant, both in written statements and verbally at the hearing, made repeated reference to the difficult personal circumstances she had encountered in the past. While I readily sympathise with the Applicant, and recognise that she has endured more than her fair share of personal problems, these are not matters that can ultimately be factored into the application of s 292-465(3).

51. Again, a number of comments are pertinent to this discussion.

52. First, there is nothing 'unusual or different' about someone experiencing difficult or trying personal circumstances. That is simply one of the vicissitudes of life; it is not something that can be described as "special".

53. Secondly, there is no real evidence before the Tribunal that would enable it to identify precisely how the pressure of the Applicant's personal circumstances manifested itself.

54. Thirdly, there is no identifiable nexus between the Applicant's personal circumstances and the making of the Citibank Contribution which, as indicated earlier, is the payment the Tribunal is called upon to now consider. There is no evidence that would enable the Tribunal to conclude that the Applicant's personal circumstances explain, or even assist, in understanding the making of that contribution.

No Special Circumstances Warranting an Exercise of the Discretion

55. For these reasons, the Tribunal concludes that there are no special circumstances within the meaning of s 292-465(3)(a) that warrant an exercise of the discretion to disregard the Applicant's excess non-concessional contribution.


Exercise Would Be Inconsistent With the Object of Division 292

56. The object of the Division is to ensure that a person's contributions have been made gradually over the course of a person's life: s 292-5.

57. The object of div 292 is not served because it cannot be said that a lump sum contribution, such as that made by the Applicant in the year ended 30 June 2010, represents contributions made gradually over the course of the Applicant's life.

58. As outlined above, the Applicant has already received the superannuation benefits intended when she cashed in $200,589.49. Any exercise of the discretion under s 292~465(1)(b) now would not be consistent with div 292 at all - the effect of it would be to confer a benefit on the Applicant not intended by div 292 at all.

Reasonable Foreseeability and Control

59. Even if it could be accepted that the pre-conditions in s 292~465(3)(a) and X were satisfied, the discretion should not be exercised.

60. At the time of making the Citibank contribution, it was completely 'reasonably foreseeable' within the meaning of s 292-465(6) that the Applicant would exceed the "bring forward" contributions cap. Moreover, she was in complete control in relation to the making of that contribution and had been previously warned of the "bring forward" cap.


61. Pursuant to s 14ZZK of the Taxation Administration Act 1953 (Cth) ('TAA'), the Applicant bears the onus of demonstrating that the assessment is excessive. It follows that the Applicant bears the onus of demonstrating the Commissioner's decision to refuse to make a written determination under s 292-465(1)(b) "should" have been made differently, and in that sense is not an appropriate result of the exercise of the statutory power or discretion'.

62. Importantly, in challenging the Commissioner's decision, the Applicant must establish any fact that demonstrates the assessment is excessive. As Latham CJ said in
Danmark Pty Ltd v. Federal Commissioner of Taxation;
Forestwood Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333 at 337:

I agree that upon an appeal the onus rests upon the taxpayer of establishing the facts upon which he relies and if it is necessary for him to establish a particular fact in order to displace the assessment he must satisfy the Court with respect to that fact.

63. The Commissioner is entitled to 'rely upon any deficiency in proof (see
Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 624), and it must follow that, if the evidence adduced by the Applicant does not discharge the burden of proof, the Commissioner's decision must stand:
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 at 89.

64. The Applicant has not demonstrated that the excess contributions tax assessment made by the Commissioner is excessive.


65. The decision under review ought to be affirmed.

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