Colless v Commissioner of Taxation

[2012] AATA 441

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(Decision by: Senior Member Bernard J McCabe)

Colless
vCommissioner of Taxation

Tribunal:

Member:
Senior Member Bernard J McCabe

Subject References:
Superannuation
excess concessional contributions
clearing account provided by superannuation fund
PDS said funds held in clearing account not to be counted as a contribution to the superannuation account
contribution properly allocated to the 2007-2008 financial year
Tribunal does not have jurisdiction to consider allocating contributions to an earlier financial year
decision affirmed

Legislative References:
Income Tax Assessment Act 1997 - The Act

Hearing date: 15 June 2012
Decision date: 13 July 2012

Brisbane

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Decision by:
Senior Member Bernard J McCabe

CORRIGENDUM

The Tribunal directs the Registrar, pursuant to subsection 43AA(1) of the Administrative Appeals Tribunal Act 1975 , to alter the text of the decision in this application as follows.

Where at paragraph 8 the decision currently reads:

That conclusion is also consistent with the wording of s 292-25(2)(a) of the Income Tax Assessment Act 1997 (Cth).

The decision shall now read:

That conclusion is also consistent with the wording of s 292-25(2)(b) of the Income Tax Assessment Act 1997 (Cth).

REASONS FOR DECISION

1. The Tribunal has been asked to consider whether a superannuation contribution that was initiated by the taxpayer's employer on 28 June 2007 should be attributed to the 2006-2007 financial year, as the taxpayer contends, or the 2007-2008 financial year, as the Commissioner contends. If the Commissioner is right, the taxpayer will have contributed more than the maximum concessional contribution in the 2007-2008 financial year, and will be liable to pay excess contributions tax on the amount of the excess.

THE FACTS

2. The factual background is not in dispute. The taxpayer is employed by a family company. Her husband is the financial director of the company, and he was responsible for ensuring superannuation payments were made in accordance with the law. The taxpayer's superannuation fund was managed by Colonial First State Investments Ltd.

3. Colonial First State superannuation offers employers a suite of additional services under the brand-name "FirstChoice" which can be accessed through a web portal called "FirstNet". One of the services is called "SuperSplit". The SuperSplit facility is described in the Product Disclosure Statement (PDS), which is reproduced in the supplementary T documents at p 66. In summary, SuperSplit allows an employer to pay a single amount in respect of all of its employees into the SuperSplit fund. Through an internal process, the monies would then be paid into the accounts for the various superannuation funds managed by Colonial First State. The SuperSplit facility was expressly designed to reduce the administrative burden for small businesses - presumably in an attempt to attract more employers to select Colonial First State as the provider of superannuation where possible.

4. The PDS makes several things clear:

(a)

SuperSplit is a service provided to the employer, not the employee.

(b)

SuperSplit is not itself a superannuation fund. As the PDS explains, "...it is a clearing account established only for your use that we operate on your behalf." There is no suggestion the account is some sort of agent for the superannuation funds or their trustees. To the contrary, if there is an agency relationship, SuperSplit is acting as the agent of the employer.

(c)

Any funds paid into the account will not be counted as being contributed to the relevant superannuation fund until those funds are actually received by the fund itself. Until the contributions are paid into the fund's account, the employer is not regarded as having discharged its obligation under the relevant legislation to make contributions. Those contributions remain in the SuperSplit account which acts as a holding account pending distribution to the relevant superannuation fund accounts.

(d)

Once a contribution has been received into the SuperSplit account and the file has been confirmed on FirstNet, the contributions will be allocated to the relevant superannuation account on the following business day.

5. I note the Employer Super FirstNet User Guide adds:

IMPORTANT!!!!!!!

Remember monies paid into your clearing account won't count for SG [superannuation guarantee] purposes until you have confirmed a contribution file and the monies have reached your employees accounts by the SG cut-off dates.

6. The taxpayer's husband explained in his statement (exhibit 4) that he authorised an electronic funds transfer from the company's bank account "to Colonial First State's bank account" on 28 June 2007. In fact, it appears the account in question was the SuperSplit account. The employer's bank confirmed the transfer was completed on 29 June 2007, and the expense was noted in the company's accounts. The contribution file (a notation made through the FirstNet web-portal) was submitted on 29 June 2007. That means the employer had done all that it could do before the end of the financial year - and certainly before 28 July 2007, which was the last date by which superannuation contributions had to be received if they were to be credited to the quarter ending 30 June 2007 for Superannuation Guarantee purposes.

7. The monies were not allocated from the SuperSplit account to the specific fund until 2 July 2007 - the next business day after 29 June, the day on which the employer effectively completed all of the steps required to make the payment.

8. The taxpayer argues the contribution was complete when the payment was made and received into First State Colonial's account, namely the SuperSplit account. Unfortunately, the PDS makes clear the account cannot be treated in that way. It is only a holding account and the documents confirm the contributions should not be regarded as being made until they are allocated from the SuperSplit account to the particular funds. That conclusion is also consistent with the wording of s 292-25(2)(a) of the Income Tax Assessment Act 1997 (Cth) which requires (relevantly) that the contribution is included in the assessable income of the superannuation fund. That did not occur until 2 July. It follows the contribution was properly allocated to the 2007-2008 financial year, as the Commissioner contends.

CONCLUSION

9. The Tribunal does not have jurisdiction in this case to consider whether it would be more appropriate to allocate the contributions to the earlier financial year. The Commissioner's determination is legally correct, and it must stand. The objection decision under review must therefore be affirmed.