MILLS v FC of T

Members:
Ms G Lazanas SM

Tribunal:
Administrative Appeals Tribunal, Sydney

MEDIA NEUTRAL CITATION: [2017] AATA 362

Decision date: 23 March 2017

G Lazanas (Senior Member)

INTRODUCTION

1. These proceedings are concerned with the application of the excess contributions tax (ECT) provisions in the Income Tax Assessment Act 1997 (Cth) (ITAA 1997). Mr Mark Mills believes that the decision by the Commissioner of Taxation to assess him to ECT in the amount of $29,539.90 is unjust, unreasonable or inappropriate and that there are "special circumstances" to allow the Commissioner to exercise a discretion to relieve him of this liability. Mr Mills exceeded the non-concessional contributions cap in the financial year ended 30 June 2012 (the relevant year), in part due to a rollover of Mr Mills' UK pension asset by Legal & General (UK) to VicSuper which occurred in the 2010 financial year although Mr Mills had intended that to happen in the 2009 financial year.

2. Mr Mills made an application to the Commissioner of Taxation pursuant to ss 292-465(1)(b) and (2) of the ITAA 1997 for a determination that all or part of his non-concessional contributions for the 2012 financial year be disregarded or allocated to another financial year so that he could be relieved of his liability to the ECT. He argued that there are "special circumstances" such as to allow the Commissioner to allocate the transfer of his UK pension asset to the 2009 financial year "which is where it was intended to be".

3.


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The Commissioner declined to do so on the basis that Mr Mill's circumstances did not constitute "special circumstances" and that it would not be consistent with the object of Division 292 of the ITAA 1997 to exercise the discretion to disregard or allocate to another financial year any or all of Mr Mill's non-concessional contributions for the 2012 financial year.

4. Mr Mills applied to the Tribunal for review of that decision. At the hearing on 10 August 2016, I informed the parties that I would reserve my decision until the outcome of an appeal to the Federal Court from the decision of the Tribunal in
Re Ward and Commissioner of Taxation [2015] AATA 919 (Ward AAT Case) dealing with the ECT and the meaning of "special circumstances".

5. On 5 October 2016, the Full Federal Court (Robertson, Davies and Wigney JJ) delivered its decision in
Ward v Commissioner of Taxation [2016] FCAFC 132 (Ward). Subsequently, I allowed Mr Mills and the Commissioner an opportunity to file written submissions in relation to the implications of the Court's decision in Ward.

6. Consistent with the interpretative approach to the statutory test in Division 292 of the ITAA 1997 recently affirmed by their Honours in Ward, I have decided that Mr Mills' circumstances do not constitute "special circumstances" and that the Commissioner was correct in his objection decision.

7. Before explaining the relevant principles and my reasons, it is helpful to briefly set out the administrative background to this proceeding, the issue in this matter, as well as the factual background and the evidence.

ADMINISTRATIVE BACKGROUND

8. On 22 June 2015, Mr Mills lodged with the Commissioner an application for an excess contributions tax determination in respect of the ECT assessed to him for the year ended 30 June 2012. Mr Mills requested the Commissioner exercise his discretion as indicated at [2] above.

9. On 4 September 2015, the Commissioner declined to make a determination.

10. On 15 October 2015, Mr Mills lodged an objection against the assessment for the ECT for the year ended 30 June 2012.

11. On 16 March 2016, the Commissioner disallowed the objection.

12. On 19 April 2016, Mr Mills applied to the Tribunal for a review of the Commissioner's objection decision.

THE ISSUE

13. The essential issue is whether the Commissioner's decision not to make a written determination under s 292-465(1)(b) disregarding or allocating to another financial year all or part of the non-concessional contributions made by him in the 2012 financial year should have been made differently. The resolution of that issue, in the present case, critically depends on whether there were "special circumstances". This is because there have to be "special circumstances" as one of the two pre-conditions for discretionary relief.

THE FACTUAL BACKGROUND AND EVIDENCE

14. The following findings of fact are based on the evidence of Mr Mills, including his oral evidence at the hearing and a number of documents tendered by him at the hearing. I also took into account the T-Documents filed and served by the Commissioner.

15. Mr Mills, who is now 60 years of age, relocated in 2005 with his family from Melbourne to London where he was involved in establishing a new business specialising in sustainable investment. At or about that time, he set up a UK pension fund with Legal &


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General (UK) to which he made regular contributions over a number of years. Mr Mills also had another superannuation fund known as the Coniston Private Super Fund that he had set up in the late 1990s in Australia. Perpetual Trustees Australia Ltd (Perpetual) had taken over the management of his private superannuation fund.

16. In 2008, he returned to Australia for family reasons. In late 2008, he had initial discussions with PricewaterhouseCoopers (PWC) regarding the income tax consequences of his relocation including the transfer of his Legal & General (UK) pension fund asset to Australia. He says, and I accept, that PWC advised that if he completed the transfer within six months of returning to Australia, the transfer would not be taxable.

17. In January 2009, he and his family relocated from London to Sydney. During the period February to April 2009, he had discussions with Perpetual regarding the possible transfer of his UK pension fund asset to his private superannuation fund. Perpetual advised that the superannuation fund had to be a Qualifying Recognised Overseas Pension Scheme (QROPS), for UK tax purposes. While Perpetual was able to offer some options that met the QROPS requirement, those funds did not meet Mr Mills' personal requirement of investing in sustainable and ethical industries.

18. In early to mid June 2009, Mr Mills concluded that transferring his UK pension fund assets to Vic Super was the best option. On 29 June 2009, Mr Mills sent an email to VicSuper stating as follows:

Further to our recent discussions I am today sending you a letter authorizing you to act on my behalf to transfer the assets from my L and G Pensions Fund to the VicSuper Equity Growth Sustainability Option.

19. On 5 August 2009, Mr Mills joined the VicSuper fund. On 15 September 2009, the transfer of the UK pension asset was received by VicSuper from Legal and General (UK) as evident from the VicSuper Beneficiary Account Annual Benefit Statement that was put into evidence at the hearing. That statement shows that $165,260.39 was transferred by Legal and General (UK), that $14,024.02 was treated as a taxable contribution (in respect of which $2,396.79 tax at the rate of 15% was paid), and that the balance of $149,281.77 was treated as a non-assessable foreign fund transfer and, therefore, as a non-concessional contribution. As noted, the transfer was effected in the 2010 financial year.

20. Mr Mills made a further contribution of $40,950 to the Coniston Private Super Fund in the 2010 financial year followed by contributions of $141,885.00 in the 2011 financial year and $181,410 in the 2012 financial year. In summary, Mr Mills made the following non-concessional contributions in the financial years ended 30 June 2010, 30 June 2011 and 30 June 2012:

Financial Year Type of Contribution Amount
2010 Non-Assessable foreign fund transfer $149,281.77
Personal $40,950.00
2011 Personal $141,885.00
2012 Personal $181,410.00
Total $513,526.77

21.


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In total, Mr Mills had made non-concessional contributions for the 2010 financial year of $190,231.77. This amount was over the non-concessional contribution cap for the 2010 financial year and triggered the bring forward provisions in s 292-85 of the ITAA 97, as explained below.

22. Before making the contribution in the 2012 financial year, Mr Mills had received an email in August 2011 from Perpetual which provided information on how much he could contribute during the 2012 financial year without exceeding the non-concessional contributions cap. This email from a representative at Perpetual relevantly stated as follows:

According to my records, in 2009/10 you made non-concessional contributions totalling $40,950 and in 2010/11, you made non-concessional contributions totalling $141,885. You have therefore not triggered the bring forward rule.

23. Perpetual had overlooked the amount contributed in September 2009 comprising the transfer of Mr Mills' UK pension asset which had been contributed to the VicSuper fund and which Mr Mills had separately arranged, and Mr Mills did not take any steps to clarify or correct the position.

24. The residual non-concessional contributions cap for the 2012 financial year available to Mr Mills, taking into account the contributions he had already made during the 2010 and 2011 financial years was $117,883.23. As the 2012 contribution of $181,410.00 resulted in Mr Mills exceeding that cap by about $64,000, on 26 February 2015 the Commissioner issued Mr Mills with an ECT notice of assessment in the amount of $29,539.90.

25. Mr Mills does not dispute that he is prima facie liable to the tax. However, he considers that the tax is a penalty and unjust and therefore made an application requesting the Commissioner to make a written determination under s 292-465(1)(b) of the ITAA 1997 to disregard or allocate to another year all or part of his non-concessional contributions for the year ended 30 June 2012.

THE LEGISLATIVE FRAMEWORK AND PRINCIPLES

26. The object of Division 292, which is a mandated precondition to the exercise of the discretion under s 292-465, is expressed at s 292-5, as follows:

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.

27. Section 292-80 provides for the liability to ECT in the following terms:

Liability for excess non-concessional contributions

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 tax is set out in that Act.

28. Subsection 292-85(1) states that excess non-concessional contributions for a financial year arise where the individual's non-concessional contributions for that particular financial year exceed the cap set out in s 292-85. The amount of the excess non-concessional contributions is the amount of the excess. Pursuant to s 292-85, the non-concessional contribution cap for the 2010 financial year is six times the amount of the concessional contributions cap. The concessional contributions cap for the 2010 financial year was $25,000. Therefore, the non-concessional contributions cap for that same year was $150,000.

29. In circumstances where the $150,000 cap is exceeded in one year, the amount of an individual's non-concessional contributions cap for a financial year is affected by the operation of the "bring forward rule" in ss 292-85(3) and (4) of the ITAA 1997. This only applies to individuals under 65 years of age which was satisfied by Mr Mills in the 2012 financial year. This rule effectively accommodates


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larger contributions by allowing persons under the age of 65 to contribute non-concessional contributions of up to $450,000 over three financial years, without exceeding their non-concessional contributions cap. Paragraphs 1.85 and 1.86 of the Explanatory Memorandum to the Tax Laws Amendment (Simplified Superannuation) Bill 2006 relevantly state as follows in relation to the "bring forward rule":

As a concession , to accommodate larger contributions, persons under age 65 in a financial year will be able to bring forward future entitlements to two years worth of non-concessional contributions...

The bring forward rule will be triggered automatically... (bolding is emphasis added)

30. Section 292-465, which is the core provision in this case, relevantly provided as follows in the 2012 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:
    • (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.
  • ...

31. In introducing the ECT, Parliament recognised that special circumstances may exist which cause the imposition of a liability to pay ECT to produce an unjust, unreasonable or inappropriate result. Accordingly, s 292-465(1)(b) of the ITAA 1997 was included as a provision with the intention of conferring on the Commissioner, where the necessary pre-conditions exist, a discretion to make a written determination disregarding all or part of a person's non-concessional contributions, or to allocate all or part of a person's non-concessional contributions from one financial year to another year.

32. Paragraph 1.117 of the Explanatory Memorandum to the Tax Laws Amendment (Simplified Superannuation) Bill 2006, which relevantly amended the ITAA 1997 to insert s 292-465, states as follows:


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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 context requires, but in this context they must make it unjust, unreasonable or inappropriate to impose the liability for excess contributions tax.

33. With reference to the exercise of the discretion conferred by s 292-465(1)(b), it is significant that it is not an unfettered discretion. As Greenwood J observed in
Commissioner of Taxation v Dowling [2014] FCA 252 (Dowling) at [93]:

...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 re-allocating 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.

34. That is, there are necessary pre-conditions before the exercise of the discretion and they are, first, a finding that "special circumstances" exist and, second, that the making of the determination is consistent with the object of Division 292: Ward at [38].

35. The two-stage nature of the process under s 292-465 was also referred to in Dowling where Greenwood J held at [125] that:

...Once the Tribunal was 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 (6) factors and any other factor the Tribunal regarded as a relevant matter.

36. In making the determination, the Commissioner (and the Tribunal standing in his shoes), may have regard to the matters specified in ss 292-465(5) and (6) and any other relevant matters: s 292-465(4). Subsection 292-465(5) refers to whether a contribution made in the relevant financial year would more appropriately be allocated towards another financial year instead. Subsection 292-465(6) relevantly refers to whether it was reasonably foreseeable, when a relevant contribution was made, that a taxpayer would have excess non-concessional contributions for the relevant financial year and in particular, the extent to which the taxpayer had control over the making of the contribution.

37. Generally, the core of the idea of "special circumstances" is that "there be something unusual or different to take the matter out of the ordinary course":
Minister for Community Services and Health v Chee Keong Thoo (1988) 78 ALR 307, 324.

38. More recently, the Full Court of the Federal Court in Ward canvassed the test in the specific context of whether there are "special circumstances" for the purposes of the exercise of the discretion in s 292-465 of the ITAA 1997. The Full Court at [39] referred to the test as being "what, if anything, takes this case out of the usual or ordinary case". In doing so, the Full Court cited with approval the observations of Kiefel J (as her Honour then was) in
Groth v Secretary, Department of Social Services [1995] FCA 1708; (1995) 40 ALD 541 at 545 that "if a tribunal were to conclude that something unfair, unintended or unjust had occurred there must be some feature out of the ordinary".

39. In the Ward AAT Case, Deputy President Humphries found at [46] that, notwithstanding that Mr Ward acted honestly and in good faith, he was not satisfied that Mr Ward had established the existence of "special circumstances" pursuant to s 292-465. The Tribunal had made a number of findings of facts, including Mr Ward did not make a conscious and informed decision to breach the bring forward rule; even if Mr Ward had some basic understanding of the bring forward rule, which might have suggested that he could not put more money into his superannuation account at the time, that understanding was displaced by the "firm and authoritative advice proffered by Wholistic Financial Solutions"; the ECT wiped out the entirety of Mr Ward's superannuation savings at retirement. The Tribunal stated at [46] and [47] that the effect of the amount of ECT on Mr


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Ward was oppressive or had catastrophic consequences. At [49], the Tribunal said the imposition of the ECT was the natural and foreseeable consequence of the decisions that Mr Ward and his advisers made, albeit in ignorance. At [52], the Tribunal referred to the ECT laws operating as they were intended to and also expressed the view that the fact Mr Ward did not deliberately set out to defy the ECT laws did not transform the tax into something unintended (emphasis in original). The Tribunal further stated at [54] that the strict application of the law to Mr Ward's situation produced a situation which was "harsh and unfair".

40. On appeal, the Full Court held in Ward as follows, at [40]-[43]:

  • 40 In our opinion, the Tribunal erred at [49] and following in proceeding on the basis that because the imposition of the tax was the natural and foreseeable consequence of the decisions of Mr Ward and his advisers, it was necessarily outside the scope of "special circumstances". This misconception also pervades the following paragraph, [50], leading the Tribunal to interpret what Kiefel J had said in Groth as meaning that there could not be "special circumstances" unless something unintended had occurred, that is, on the Tribunal's approach, something other than the natural and foreseeable consequence of the decisions Mr Ward and his advisers made. Then, at [52], the notion of "unintended" is given a further application by the Tribunal in its statement that the legislative provisions operated as they were intended to. On those bases, the Tribunal found it could not exercise the discretion because special circumstances were absent.
  • 41 In our opinion, it was open to the Tribunal to find that there were "special circumstances" if it found that the provisions operated on Mr Ward, in his individual circumstances, in an unfair or unjust way because, through a misunderstanding of an adviser by virtue of the misleading notice provided by BT Super for Life, Mr Ward, acting honestly and carefully, accidentally breached the bring forward rule which had consequences disproportionate to the intended operation of the statute.
  • 42 Contrary to the applicant's submissions, it is not to the point, or within the Commissioner's notice of contention, that the Tribunal's finding that the notice provided by BT Super for Life was misleading may have been contestable. We also note that at the forefront of the submissions in reply on behalf of Mr Ward was an attempt, later abandoned, to contend that BT Super for Life "had misled Mr Ward and his advisor, Ms Smith, by providing one page of a four page account statement for the super retirement account, thereby denying them any useful information about the true statutory character of the $450,000 before it was contributed to a new fund." (Emphasis in original.) The Tribunal did not proceed on this basis, as is made clear at [43] of its reasons. It also appears that the applicant's case was not put before the Tribunal on this basis.
  • 43 In our opinion, the Tribunal erred in law by taking too narrow a view of what may constitute "special circumstances" within the meaning of the statute. This may have been caused by unnecessarily considering factors in isolation before focusing on the entirety of the circumstances said by the applicant to be special. It was certainly caused, in our opinion, by looking at expressions in other decisions and taking those expressions out of their factual and legal context.

41. Mr Mills relevantly submitted in relation to the relevance of the Ward case:

Like Mr Ward, the transfer here was a few days late by dint of living overseas, otherwise I was acting honestly seeking no tax advantage in circumstances; I prudently sought advice assiduously from two highly reputable advisers only to be slapped and I received a penalty far in excess of any tax advantage I was said to have inadvertently obtained. Thus, there are some uncanny parallels between the two cases for it at least to be open to the Tribunal to exercise the discretion in my favour;

...

Despite having declared the result unfair or unjust, the Court noted at [43] the Tribunal took a too narrow view of what constituted


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special circumstances ...

42. The Commissioner submitted that the decision in Ward turned upon the particular idiosyncratic facts of that case, and the particular reasoning adopted by the Tribunal under review and it was against that background that the Court found that the Tribunal took too narrow a view of "special circumstances". The Commissioner also emphasised that no general proposition can be extrapolated from Ward that the receipt of incorrect advice constitutes "special circumstances".

WERE THERE SPECIAL CIRCUMSTANCES?

43. Mr Mills argued at the hearing that there were "special circumstances" in his case. In summary, he submitted that this was due to the following factors:

  • (a) The ECT is due to the fact that the transfer of his UK pension fund asset happened in the year ending 30 June 2010 which triggered the "bring forward rule". Had he managed to transfer it prior to 30 June 2009, the Commissioner would not have imposed the ECT in the year ended 30 June 2012. The events leading to the transfer in September 2009 (a few months after the end of the 2009 financial year) resulted from an unfortunate and innocent sequence of events.
  • (b) Mr Mills had received advice that he had to transfer his UK pension fund asset within six months of relocating to Australia. Had he done so, that is, had he transferred it by 30 June 2009, he would not have incurred the ECT. The fact that he did not manage the transfer within the requisite six month period was beyond his control because of the complexities associated with meeting the QROPS requirement and certain personal investment criteria.
  • (c) Mr Mills was not aware of the fact that the transfer of his UK pension fund asset would count as a non-concessional contribution especially as he had on numerous occasions beforehand rolled over funds between superannuation funds and none of those roll overs had been treated as a "new" contribution. He said it was not unreasonable for him to consider that transfers of funds from one fund to another would not be treated similarly to all previous rollovers.
  • (d) The inclusion of the transfer of the UK pension asset in the calculation of the non-concessional contributions is in itself a "special circumstance" because it is an uncommon event.
  • (e) Mr Mills acted in good faith on advice from professional advisers who advised him about the complexities of Australian taxation and superannuation system but they overlooked the fact of him having made the transfer of his UK pension asset when advising as to the amount of the optimal contribution that he could make in the year ended 30 June 2012. He said that his advisers should have known about the transfer in September 2009 as they were involved in advising him about the possibility of transferring his UK pension asset to an Australian superannuation fund. Mr Mills had not specifically told them or sought advice about the implications of the transfer made in September 2009 as he said he did not even think about it.
  • (f) The ECT is a penalty tax and should not apply as any reasonable person would agree that it is unjust, unreasonable and inappropriate;
  • (g) Mr Mills is a genuine taxpayer and did not set out to deliberately derive a favourable tax benefit. He estimated that the only tax benefit that he arguably inadvertently enjoyed based on the period of time between his excess contribution in 2012 and late 2015, when he paid the ECT to the Commissioner, was about $3,360 assuming an above market rate of interest.
  • (h) The ECT of $29,539.90 that he incurred is excessive having regard to his circumstances.

44. In his written submissions received on 24 January 2017 after the decision of the Court in Ward, Mr Mills submitted that his circumstances resulted in an "unfair or unjust result" sufficient to enliven a conclusion that there were special circumstances, because, amongst other factors:

... despite seeking advice from PWC prior to my relocation back to Australia I did not


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receive advice that my overseas pension fund would not be considered in the same way as a normal rollover. Therefore, it can be strongly argued that the adviser at Perpetual Trustees provided me with advice based on a misunderstanding which had consequences disproportionate to the intended operation of the statute. Moreover, like Ward I have acted honestly and carefully by seeking advice from at least two highly credible providers of advice. On itself, this is unusual when compared to your typical case where no advice whatsoever is usually sought prior to making an offending contribution.

45. I do not consider that the circumstances, either alone or together, constitute "special circumstances" as required by s 292-465(3)(a) of the ITAA 1997. Adopting the test in Groth, as recently affirmed in Ward at [39], I find that there is nothing which takes Mr Mills' circumstances out of the "usual" or "ordinary" case.

46. I accept that Mr Mills intended to make the transfer of his UK pension asset of $149,281.77 in the 2009 financial year. However, I agree with the Commissioner's position that the fact that the contribution was received by VicSuper in the 2010 financial year was a fact that Mr Mills knew about before the contribution of $181,410 was made in the 2012 financial year which led to the ECT. That is, in 2012, when seeking Perpetual's advice, Mr Mills should have taken into account the fact that his UK pension fund asset had been transferred to VicSuper, including the fact that it was made in the 2010 financial year and not the 2009 financial year.

47. Furthermore, while I accept that Mr Mills intended to transfer his UK pension fund asset to VicSuper in early to mid June 2009, he only authorised VicSuper to progress the transfer on 29 June 2009. It was therefore reasonably foreseeable, as Mr Mills acknowledged at the hearing, that the transfer would not take place until after 30 June 2009. An intention to make a contribution in a different financial year does not itself amount to special circumstances:
Re Chantrell and Commissioner of Taxation [2012] AATA 179 at [30]-[31].

48. The fact that the ECT imposed on Mr Mills was due in part to the non-concessional contribution made in the 2010 financial year which, in turn, triggered the "bring forward rule" in 2010 is the result of the legislative framework. As set out above, the "bring forward rule" is automatic in its application. That is to say, once Mr Mills exceeded the non-concessional contributions cap in the 2010 financial year, the "bring forward rule" was triggered. But it was the contribution that he made in the 2012 financial year that led to the ECT liability and Mr Ward was in total control of that event.

49. The fact that Mr Mills was ignorant as to the application of the law with respect to the transfer of his UK pension fund asset to a superannuation fund is not a "special circumstance". He said that he was unaware that the transfer of his UK pension fund asset would be counted as a contribution for the purposes of calculating his non-concessional contributions especially as he had done numerous rollovers on other occasions without any adverse tax issues. But he relied, as many taxpayers do, on experts to advise him. Consequently, he should have sought specific advice. He said he did not do so as he did not think about the transfer of his UK pension fund asset after it was made. In this regard, Mr Mills' circumstances are very different to those of Mr Ward who the Tribunal found had received "firm and authoritative advice" and that advice could be described as "careless" (Ward AAT Case [44]-[45]).

50. Moreover, the fiscal consequences that flow from an excessive contribution do not, of themselves, make for "special circumstances". This is because "special circumstances need to be found beyond the actual rate imposed and beyond the specific conditions which give rise to that rate being imposed":
Re Verschuer and Commissioner of Taxation [2013] AATA 12 at [61]. Nothing said in Ward detracts from that conclusion.

51.


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The facts that Mr Mills is a genuine taxpayer who did not set out to obtain a tax advantage and who, on his own calculations, inadvertently enjoyed a tax benefit of about $3,360 also do not amount to "special circumstances" for the purposes of Division 292. They are part of the factual matrix but they are not unusual. Mr Mills' argument that the transfer of the UK pension fund asset is in itself a "special circumstance" because, according to him, it is an uncommon event does not, either on its own or taken with his other factual circumstances, make the case one of "special circumstances". Again, it is part of the factual matrix and does not take Mr Mills' circumstances out of the "usual" or "ordinary" case.

52. Mr Mills also relied on s 280-15(1) of the ITAA 1997 which states as follows:

  • (1) 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 neutralises the favourable tax treatment arising from the excessive contributions.
  • ...

53. Mr Mills claims that he did not receive "favourable tax treatment" from his contributions and, on the contrary, was disadvantaged compared to Australian taxpayers, as he could not claim a personal contribution superannuation deduction because he was a non-resident of Australia in the relevant period.

54. The Commissioner's position is that s 280-15 is contained in Division 280 of the ITAA 1997 which is a "Guide": s 280-1(1). A "Guide" is defined in s 950-150 of the ITAA 1997 which relevantly states as follows:

  • ...
  • (2) Guides form part of this Act, but they are kept separate from the operative provisions. In interpreting an operative provision, a Guide may only be considered:
    • (a) in determining the purpose or object underlying the provision; or
    • (b) to confirm that the provision's meaning is the ordinary meaning conveyed by its text, taking into account its context in the Act and the purpose or object underlying the provision; or
    • (c) in determining the provision's meaning if the provision is ambiguous or obscure; or
    • (d) in determining the provision's meaning if the ordinary meaning conveyed by its text, taking into account its context in the Act and the purpose or object underlying the provision, leads to a result that is manifestly absurd or is unreasonable.

55. The Commissioner submitted that as s 280-15 is a Guide, it can only be considered in the limited circumstances indicated above and that none of those circumstances arise in the present case as the ECT statutory provisions expressly set out the tax consequences for a taxpayer exceeding his or her non-concessional contributions cap. I agree with the Commissioner's submission as to the limited relevance of s 280-15 in this situation. I also agree with the Commissioner's submission that Mr Mills is not precluded from the operation of the ECT provisions by reason of his non-resident status or the fact that the "tax benefit" was only about $3,360. Furthermore, these facts are not sufficient either alone or in combination with the other facts to constitute "special circumstances".

56. Based on my conclusion that there are no "special circumstances" in this case, it is unnecessary for me to consider whether the making of the determination is consistent with the object of Division 292 of the ITAA 1997. It follows that it is also unnecessary for me to consider whether the discretion ought to have been exercised by the Commissioner to make the determination as both pre-conditions were not satisfied.

DECISION

57. Accordingly, for the reasons set out above, I affirm the decision under review.


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