Aston v FC of T

Members:
D Mitchell M

Tribunal:
Administrative Appeals Tribunal, Brisbane

MEDIA NEUTRAL CITATION: [2023] AATA 1848

Decision date: 28 June 2023

D Mitchell (Member)

INTRODUCTION

1. Mr William Aston (the Applicant) is seeking review of an objection decision of the Commissioner of Taxation (the Respondent) dated 8 April 2021.^[1] Exhibit 1, T Documents, T18, page 54, Notice of Objection Decision; and T2, pages 5-7, Reasons for Decision.

2. The reviewable objection decision disallowed the Applicant's objection to the Respondent's decision not to exercise his discretion to reallocate excess concessional contributions of $24,999.81 to the 2018-2019 financial year.^[2] Exhibit 1, T Documents, T18, page 54, Notice of Objection Decision.

BACKGROUND

3. The Applicant is the sole director of Kelseal Rubber Mouldings Pty Ltd (Kelseal).^[3] Exhibit 1, T Documents, T13, pages 42-43, ASIC Search for Kelseal dated 22 February 2021.

4. The facts in relation to the super contribution in issue are not disputed and were summarised by the Respondent as follows:^[4] Exhibit 5, Respondent’s outline of submissions, pages 2-3.

Contributions

5. On Wednesday 26 June 2019 at 12.11pm^[5] Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, pages 1-5. , the Applicant submitted a QuickSuper contribution summary, for the 2019-20 financial year, for contributions to be made to LUCRF Super (L.U.C.R.F Pty Ltd ACN 382680883). The contributions summary included $22,830.88 salary sacrifice and $2,168.93 superannuation guarantee (SG) contributions for the Applicant, totalling $24,998.81 (the contribution) as well as SG contributions for six employees. ^[6] Exhibit 2, Tribunal Book, ST3, page 59, A03 Document.

6. QuickSuper is a clearing house used by LUCRF Super. The LUCRF Super QuickSuper User Guide - Single Employer October 2017^[7] Exhibit 2, Tribunal Book, ST-5, pages 62-73, A05 Document. , supplied in evidence by the Applicant, states that:

When you sign up for QuickSuper, who are you entering into an agreement with?

QuickSuper is owned and operated by Westpac Banking Corporation (Westpac), not LUCRF Super. So when you register for QuickSuper, you'll be asked to accept the QuickSuper terms and conditions with Westpac before proceeding. The QuickSuper terms and conditions are standard for all employers and cannot be changed on request.^[8] Exhibit 2, Tribunal Book, ST5, page 63, A05 Document and ST 22 , page 421 Registration process Step 12.

7. The LUCRF Super QuickSuper User Guide - Single Employer October 2017 also states that:

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The direct debit request will be instigated after 4pm each day. The money will be processed within three business days of your request.^[9] Exhibit 2, Tribunal Book, ST5, page 70, A05 Document.

8. On Wednesday 26 June 2019 a payment via direct debit was made from the Applicant's Commonwealth Bank account to QuickSuper^[10] Westpac ceased to offer direct debit as a method of payment to Quick Super from September 2020. , the transaction being the last transaction on the account that day. ^[11] Exhibit 2, Tribunal Book, ST4, page 61, A04 Document.

9. The relevant contribution was received by LUCRF Super on 1 July 2019.^[12] Exhibit 1, T Documents, T3, page 9, MATS report received on 25 July 2019 and T6, pages 14-15, MATS report received on 25 July 2019.

10. The Applicant made a further $22,830.50 salary sacrifice contribution and $2,168.90 superannuation guarantee contribution which was received by LUCRF Super on 5 August 2019.^[13] Exhibit 1, T Documents, T4, page 11, MATS report received on 8 August 2019 and T7, MATS report received on 8 August 2019.

Excess Concessional Contributions

11. On 12 August 2019, LUCRF Super advised the Applicant that he had exceeded his concessional contributions cap for the 2019-20 financial year.^[14] Exhibit 2, Tribunal Book, ST11, page 91, A10 Document.

12. On 16 October 2020, the Commissioner advised the Applicant that he had made excess concessional contributions (ECC) for the 2019-20 financial year totalling $25,358.81.^[15] Exhibit 1, T Documents, T8, page 18, Excess concessional contributions determination for the year ended 30 June 2020.

13. On 16 October 2020, the Commissioner issued a Notice of Amended Assessment including the ECC amount in the Applicant's assessable income for the 2019-20 financial year.^[16] Exhibit 1, T Documents, T9, pages 22-25, Notice of amended assessment for the year ended 30 June 2020.

14. On 5 November 2020, the Applicant submitted an Application - excess contributions determination form seeking the Commissioner's discretion to reallocate the salary sacrifice amount of $22,830.88 from the 2019-20 financial year to the 2018-19 financial year.^[17] Exhibit 1, T Documents, T10, pages 26-29, Application dated 5 November 2020 and T11, page 30, Letter from the Applicant dated 5 November 2020.

15. On 3 February 2021, the Commissioner advised the Applicant that he had excess non-concessional contributions (ENCC) (after tax) for the 2019-20 financial year totalling $25,358.81.^[18] Exhibit 1, T Documents, T12, page 38, Excess non-concessional contributions determination for the year ended 30 June 2020.

16. On 24 February 2021, in response to the Applicant's discretion application, the Commissioner made a decision to not reallocate $24,999.81 of ECC to the 2018-19 financial year.^[19] Exhibit 1, T Documents, T16, pages 46-48, Notice of decision for Application – excess contributions determination.

5. On 8 March 2021, the Applicant filed an objection.^[20] Exhibit 1, T Documents, T17, Objection to Application dated 8 March 2021.

6. On 8 April 2021, the Respondent disallowed the Applicant's objection.^[21] Exhibit 1, T Documents, T18, Notice of objection decision.

7. The Applicant sought review of the Respondent's objection decision by this Tribunal by way of an application made on 9 April 2021.^[22] Exhibit 1, T Documents, T1, pages 1-4, Application for Review.

8. On 22 February 2023, a Hearing was conducted using Microsoft Teams. At the Hearing, the Applicant was represented by Ms Oakes, his tax agent. The Applicant provided two written statements ^[23] Exhibit 2, Tribunal Book, ST2, page 58, Statutory Declaration of the Applicant dated 11 March 2022 and Exhibit 4, Statutory Declaration of the Applicant. throughout the Tribunal process and as he was not required for cross-examination, he did not provide evidence at the Hearing.

THE LAW

9. The relevant law in this matter includes the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) and the Taxation Administration Act 1953 (Cth) (TAA 1953).

10. Where a taxpayer is dissatisfied with an assessment, determination, notice or decision they may object against it in accordance with the requirements set out in Part IVC of the TAA 1953.^[24] Section 14ZLof the TAA 1953.

11. The Respondent must decide whether to allow, wholly or in part, or disallow the taxpayer's objection.^[25] Section 14ZY of the TAA 1953.

12. A taxpayer who is dissatisfied with the Respondent's objection decision may apply to the Tribunal for a review of the decision or appeal to the Federal Court against it.^[26] Section 14ZZ of the TAA 1953.

13. Section 14ZZK(b)(ii) of the TAA 1953 provides that on application for review of a reviewable objection decision, the Applicant has the burden of proving that the taxation decision should not have been made or should have been made differently.

14. Section 280-15(1) of the ITAA 1997 provides that there is a limit to contributions that can be made in respect of an individual in a year that receives favourable tax treatment.

15. Division 291 of the ITAA 1997 deals with excess contributions. It states that there is a cap on the amount of superannuation contributions that may receive concessional tax treatment for an individual in a financial year.^[27] Section 291-1 of the ITAA 1997.

16. The object of Division 291 of the ITAA 1997 is expressed in section 291-5 as follows:

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The object of this Division is to ensure, in relation to concessional contributions to superannuation that the amount of concessionally taxed *superannuation benefits that an individual receives results from contributions that have been made gradually over the course of the individual's life.

Note: Division 292 has the same object, in relation to non-concessional contributions.

17. Pursuant to section 291-20 of the ITAA 1997, an individual has an excess concessional contribution for a financial year where the amount of their concessional contributions for the year exceeds their concessional contribution cap for the year.

18. Section 97-5 of Schedule 1 to the TAA 1953 provides that if an individual has an excess concessional contribution for a financial year, the Respondent must issue an excess concessional contributions determination stating the amount of those excess concessional contributions.

19. The Respondent has a discretion to disregard concessional contributions or allocate them to a different financial year.^[28] Section 291-460 of the ITAA 1997.

20. Section 291-465 of the ITAA 1997 provides:

(1) The Commissioner may make a written determination that, for the purposes of working out the amount of your *excess concessional contributions for a *financial year, all or part of your *concessional contributions for a financial year is to be:

(a) disregarded; or

(b) allocated instead for the purposes of another financial year specified in the determination.

Conditions for making of determination

(2) The Commissioner may make the determination only if:

(a) you apply for the determination in accordance with this section; and

(b) the Commissioner considers that:

(i) there are special circumstances; and

(ii) making the determination is consistent with the object of this Division and Division 292.

(2A) Paragraph (2)(a) does not apply if:

(a) the determination relates to a contribution that is an amount the Commissioner pays for your benefit under Part 8 of the Superannuation Guarantee (Administration) Act 1992; and

(b) the amount represents an amount of a charge payment (within the meaning of section 63A of that Act) paid as a result of a disclosure to which paragraph 74(1)(a) of that Act applies; and

(c) the entity making the disclosure qualified, under section 74 of that Act, for an amnesty in relation to the *superannuation guarantee shortfall to which the charge payment relates.

Matters to which regard may be had

(3) In making the determination the Commissioner may have regard to the following:

(a) whether a contribution made in the relevant *financial year would more appropriately be allocated towards another financial year instead;

(b) 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:

(i) if the relevant contribution is made in respect of you by another individual-the terms of any agreement or arrangement between you and that individual as to the amount and timing of the contribution; and

(ii) the extent to which you had control over the making of the contribution;

(c) any other relevant matters.

Requirements for application

(4) The application:

(a) must be in the *approved form; and

(b) can only be made after all of the contributions sought to be disregarded or reallocated have been made; and

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(c) if you receive an *excess concessional contributions determination for the *financial year-must be given to the Commissioner within:

(i) 60 days after receiving the determination; or

(ii) a further period allowed by the Commissioner.

Notification

(5) The Commissioner must give you:

(a) a copy of the determination; or

(b) if the Commissioner decides not to make a determination-notice of that decision.

Review

(7) If you are dissatisfied with:

(a) a determination made under this section in relation to you; or

(b) a decision the Commissioner makes not to make such a determination; you may object against the determination, or the decision, as the case requires, in the manner set out in Part IVC of the Taxation Administration Act 1953.

21. The ITAA 1997 does not define what constitutes special circumstances. A number of Court and Tribunal decisions have considered special circumstances in relation to taxation matters. It is accepted that the term "special circumstances" has its ordinary meaning.

22. In
Pitts v Federal Commissioner of Taxation [2017] AATA 685, Senior Member Walsh provided helpful commentary on the meaning of special circumstances that have arisen from the social security perspective and for the purposes of section 292-465 of the ITAA 1997.^[29] Section 292-465 of the ITAA 1997 contains the same special circumstances discretion as found in section 291-465 of the ITAA 1997, however, refers to non-concessional contributions rather than concessional contributions.

23. Senior Member Walsh provided at [107-109]:

107. However, the meaning of "special circumstances" has been considered extensively by the Federal Court and the Tribunal in the context of social security and family assistance law. In summary, it has been held that for circumstances to constitute "special circumstances" they must be circumstances which are "unusual, uncommon or exceptional," "markedly different from the usual run of cases," "special" or "out of the ordinary" and they include events which would render the strict application of the rule in question unfair, inappropriate or unjust: see for example,
Re Ivocic and Director General of Social Services [1981] AATA 57 at [45];
Re Beadle and Director-General of Social Security (1984) 6 ALD 1 (Re Beadle) at 3 per Toohey J;
Beadle and Director General of Social Security (1985) 60 ALR 225 at 228 as per Bowen CJ, Fisher and Lockhart JJ;
Groth and Secretary, Department of Social Security (1995) 40 ALD 541 (Groth) at 545 per Kiefel J;
Dranichnikov v Centrelink [2003] 75 ALD 134 at [66] per Hill J;
Angelakos and Secretary, Department of Employment and Workplace Relations [2007] FCA 25 (Angelakos) at [33];
Davy and Secretary, Department of Employment and Workplace Relations [2007] AATA 1114; (2007) 94 ALD 693 (Davy) at [80] and
Re Topp and Secretary, Department of Families, Housing, Community Service and Indigenous Affairs [2010] AATA 99 at [39]. Circumstances might be "special", although they apply to more than one person or class of persons, provided they are not of universal application: see
Fischer v Secretary, Department of Families, Housing, Community Services & Indigenous Affairs (2010) 185 FCR 52 at [65]. However, ultimately, whether circumstances answer any of these descriptions depends on the context in which they occur: Re Beadle; Groth; Angelakos; Davy.

108. From the cases which have considered what constitute "special circumstances" for the purpose of s 292-465 of the ITAA 1997, the following general principles emerge:

• Ignorance of the existence or effect of the law does not, by itself, amount to "special circumstances": Liwszyc at [77] per McKerracher J;
Schuurmans-Stekhoven and Commissioner of Taxation [2012] AATA 62;
Tran and Commissioner of Taxation [2012] AATA 123 (Tran) at [15] per Dr Hughes, Member;
Brady and Commissioner of Taxation [2016] AATA 97 (Brady) at [44] per Senior Member Lazanas;

• "Special circumstances" does not extend to an error on the taxpayer's part,

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even if the error was innocent and made in good faith: Liwiszyc at [77]; Tran at [15];

• An error on the part of a third party will not, of its own force, amount to "special circumstances": Liwiszyc at [77];

• Incorrect or deficient financial advice from a third party professional will not, on its own, satisfy the requirement for "special circumstances":
Kerr and Commissioner of Taxation [2007] AATA 1732 at [34] and [35] per Senior Member Ettinger;
Mills and Commissioner of Taxation [2017] AATA 362 at [44] and [45] per Senior Member Lazanas;
Davenport and Commissioner of Taxation [2012] AATA 760 at [79] per Senior Member Walsh and
Re Lynton and Commissioner of Taxation [2012] AATA 667 at [17] per Dr Hughes, Member; Brady at [44];

• While the effect of the circumstances on a taxpayer may be described as unfortunate and unforseen, this is insufficient to render the imposition of the excess contributions tax unjust, unreasonable or inappropriate and to constitute "special circumstances:
Chantrell and Commissioner of Taxation [2012] AATA 179 (Chantrell) at [32] per Dr Hughes, Member; and

• It is the circumstances that must be "special", not the individual's experience of them: Tran at [15].

109. In Brady, Senior Member Lazanas commented (at [45]):

The cases where special circumstances have been found for the purposes of Division 292 and, therefore, the discretion enlivened, are very few. In
Re Hamad and Commissioner of Taxation [2012] AATA 530, Senior Member Allen found that there were special circumstances as the taxpayer had been misled by his employer as to the timing of the employer's contributions. In
Re Bornstein and Commissioner of Taxation [2012] AATA 424, Senior Member McCabe was satisfied that there were special circumstances as there was ambiguity on the ATO's website about the timing for the making of contributions because the time permitted for contributions by employers is different to that for employees which led to confusion. Also influential was the fact that the taxpayer "was denied the opportunity to avoid compounding the earlier error he had made because the Commissioner did not alert him to the true position before the further payment was made" (at [11]). In
Re Longcake and Commissioner of Taxation [2012] AATA 576, Deputy President Groom referenced the facts that the taxpayer did not know that his employer had not made the contributions in a timely manner and that there was confusion arising from the fact that employers have additional leeway for making contributions whereas there are stricter time limits for employees and, additionally, the fact that the employer had difficulties with cash flow that may have been a cause of the delay in making the contributions.

ISSUES

24. The issue before the Tribunal is whether the Applicant has discharged his burden to prove that the decision not to make a determination to reallocate the concessional contribution of $24,999.81 to the 2018-2019 financial year should not have been made or should have been made differently.

25. In determining that issue, the Tribunal must consider:

(a) Whether the discretion in section 291-465(1) of the ITAA 1997 is enlivened having regard to the considerations in section 291-465(2) of the ITAA 1997, specifically whether:
(i) there are special circumstances; and
(ii) exercising the discretion is consistent with the object of Divisions 291 and 292 of the ITAA 1997.
(b) If yes to (a)(i) and (ii) above, whether the discretion in section 291-465(1) of the ITAA 1997 ought to be exercised, where regard may be had to the matters in section 291-465(3) of the ITAA 1997.

APPLICANT'S EVIDENCE AND CONTENTIONS

26. The Applicant submitted a Statutory Declaration dated 11 March 2022, stating that:^[30] Exhibit 2, Tribunal Book, ST2, pages 57-58, A02 Document.

• Since 2011, his aim had been to deposit the maximum allowed concessional contributions each year into superannuation

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to build up his balance for a completely self-funded retirement.
• As a result of working for the Bank of NSW for 20 years (commencing in 1974), he was trained to understand that if cleared funds were withdrawn from an account before 4.00pm, they would take up to three working days to reach the intended account, with day one being the day funds were actually withdrawn from the account. Typically, the recipient bank would show the payment in their customer's account as at the date the money was received even through the funds are pending clearance for three days.
• Following his time in the bank, he kept up with changes in the payment systems, noting that same day settlement was introduced in November 2018 and real-time payment processing began in February 2018.
• His company had previously had an Accounts Manager who handled all payroll matters. However, due to downturn in business, their position was terminated and he took over the payroll duties with no training.
• His accountant at the time had two strokes by June 2019. The accountant was aware that he was planning to pay the superannuation on 26 June 2019 for the 2018/2019 year and did not advise him he needed to pay it prior to that date.
• From his work experience and from reading the LUCRF documentation regarding superannuation payments, he expected the transaction made on 26 June 2019 to credit to his superannuation account in the 2018/2019 financial year to count towards the cap for that year.
• He received no financial gain in paying the superannuation on 26 June 2019 and he had sufficient funds in the business account to transfer the superannuation in the days preceding.
• At the time he made the July 2019 superannuation contribution, he did not know that the June 2019 contribution had been credited effective of 1 July 2019.
• At the time he made the June and July payments in 2019, he did not know that a payment to superannuation, described as a direct debit would not be a direct payment, rather went through several different accounts before reaching his super fund.
• Had he have known EFT payments were quicker, he would have paid the superannuation that way.
• LUCRF changed their wording about payments to make it clearer after he lodged an AFCA complaint against them.

27. The Applicant also submitted a Statutory Declaration dated 22 June 2022, providing:^[31] Exhibit 4, Statutory Declaration of the Applicant.

• Further details with regards to the accountant he engaged in 2019.
• His accountant was difficult to contact. He was only able to see him on 26 June 2019 for year-end advice and only face-to-face communication was appropriate.
• His main concern at the time was to get the tax deduction for paying superannuation for the company in the 2019 year, rather than paying the superannuation by the legal due date of 28 July 2019. As there were three business days left, he believed that his superannuation payments would clear before the end of the financial year.
• His accountant calculated how much additional superannuation he could pay up to his contributions limit for 2019. He asked him "Am I right to pay my salary sacrifice now?", he said "Yes".
• He proceeded to make the Direct Debit payment in front of his then accountant. His accountant did not caution him that they were too close to the end of the financial year to make a payment in that manner for his superannuation. He did not suggest that the payment be made by EFT, which would have been processed overnight.
• Had his accountant have told him that his 2019 superannuation contributions needed to be paid by EFT to be counted in the 2019 year, he would have followed his instructions.
• The money left his account once he finished making the direct debit payment on 26 June 2019.

28. At the Hearing, Ms Oakes contentions were consistent with the previously filed Statement of Facts, Issues and Contentions.^[32] Exhibit 3, Applicant’s amended Statement of Facts, Issues and Contentions.

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Ms Oakes summarised the Applicant's contentions as being that he had faced a 'perfect storm' of events leading to the unjust outcome namely:^[33] Exhibit 3, Applicant’s amended Statement of Facts, Issues and Contentions, page 5.

- The trained bookkeeper leaving
- The accountant having two strokes and not providing appropriate advice
- The LUCRF website being misleading
- The payment being transferred through four sets of hands after the applicant made the payment, the timing of each transfer being outside of the applicant's control
- The applicant having a superannuation balance above the transfer balance cap, leading to the imposition of not just $5,237.51 tax but $17,156.15 tax.

29. Ms Oakes contended that as a result of those circumstances, the superannuation payment made on 26 June 2019 should be treated as having been made in the 2018-2019 financial year.

30. Ms Oakes sought to rely on the decision in
Bornstein v Commissioner of Taxation [2012] AATA 424. Ms Oakes contended that the facts are similar and that the Applicant too had received poor advice from his accountant, the website was misleading, the payment was credited after the required date and he was only one day late.

31. Ms Oakes submitted that there was nothing to trigger the Applicant to know that he needed to make the contribution by a certain date. He had a strongly held view as to what three days meant and the date of his payment was tied to the appointment date that the Applicant could secure with his accountant.

32. Ms Oakes contended that the Applicant meets the special circumstances tests due to the difference in interpretation of 3 business days and the ambiguity on the superannuation website, the Applicant's intention to only make maximum contributions, the Applicant took advice from his accountant and because the penalty for being 1 day late is harsh.

33. The Tribunal notes that Ms Oakes provided submissions post the Hearing and that those submissions were consistent with the submissions outlined above.

RESPONDENT'S CONTENTIONS

34. Ahead of the Hearing, the Respondent provided an Outline of Submissions of which their contentions at the Hearing were consistent.

35. Having considered all of the evidence before it, the Tribunal considers the Respondent's analysis of the documentary evidence to be comprehensive, further for the reasons set out below the Tribunal accepts and agrees with the contentions made by the Respondent.

36. The Respondent set out their contentions as follows:^[34] Exhibit 5, Respondent’s Outline of Submissions, paragraphs 35-80.

35. The Commissioner submits that a contribution to a superannuation fund is "made" when the funds are credited to the superannuation providers' bank account. This is the Commissioner's stated view ^[35] Taxation Ruling TR 2010/1 Income Tax: Superannuation contributions , paragraph 183 to 186. and was the conclusion in both Chantrell v Commissioner of Taxation ^[36] Chantrell v Commissioner of Taxation [2012] AATA 179 at [19] to [21]. and Liwszyc v Federal Commisisoner of Taxation in which McKerracher J stated at [69]:^[37] Liwszyc v Federal Commissioner of Taxation 2014 ATC ¶20-441 [69] .

In my view, the better argument is that the contribution was made on the date the funds were actually received. Once that is understood (and, indeed, as part of the context), nothing in the ITAA 1997 permits a taxpayer or a superannuation provider to deem a contribution to have been made on a date other than the date on which it was in fact made. Stipulating by some covering email or communication that it is intended for some other date, namely, the date on which the BPay entry was made, does not change the reality of the actual date of receipt.

Special Circumstances

36. The Commissioner submits that there are no 'special circumstances', within the meaning of paragraph 2941-465(3)(a) of the ITAA 1997 as it has consistently been interpreted by the Courts and Tribunal, existing here. The facts of this case are closely aligned to those in Chantrell,^[38] Chantrell v Commissioner of Taxation [2012] AATA 179 at [31] . Rawson,^[39] Rawson v Commissioner of Taxation [2012] AATA 322 at [91] . Paget ^[40] Paget v Federal Commissioner of Taxation [2012] AATA 334 at [94] . and Hope v Commissioner of Taxation ^[41] Hope v Commissioner of Taxation [2014] AATA 877 at [98] . , where payments to superannuation funds were made during the last day or days of the financial year but credited to the relevant

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superannuation funds the following financial year. In these cases, the Tribunals have consistently held that this fact does not on its own constitute special circumstances.

37. There was nothing unusual or out of the ordinary about the time taken for the contribution to be processed. As stated above (paragraph 5), the contribution was initiated by the Applicant at 12.11pm on Wednesday 26 June 2019. The LUCRF Super QuickSuper User Guide - Single Employer October 2017 stated that for payments made via direct debit, the direct debit request would not be instigated until after 4pm each day.

38. Further, when an employer enters contribution in QuickSuper the 'Confirm Submission' and 'Contribution Summary' screens both state in bold:

The file will be processed at 4pm (Sydney time) on the scheduled date or the following banking day if it has already passed.^[42] Exhibit 2, Tribunal Book, ST22, pages 444-445, Response to Summons to Produce from Australian Financial Complaints Authority.

39. Information supplied by the Applicant from the Australian Payments Network on the bulk exchange payments between financial institutions specified exchanges at 10am, 1pm, 4pm, 6:30pm, 8:45pm and 10:30pm ^[43] Exhibit 2, Tribunal Book, ST9, page 89, Document A08. . The earliest that the direct debit payment instigated after 4pm could be made to QuickSuper was 6.30pm.

40. The LUCRF Super QuickSuper Guide - Single Employer October 2017 also stated that a contribution would be processed within three business days of the direct debit request. Given that the payment from the Applicant's bank account did not occur until 6.30pm, which is outside business hours, allowing three business days for processing, Thursday 27 June, Friday 28 June and Monday 1 July 2019, meant that the contribution would be processed by Monday 1 July 2019.

41. It was not reasonable for the Applicant to conclude that Wednesday 26 June 2019 was included as a business day. The Applicant, on his own reasoning should have concluded that it would not be counted as a business day, noting that the LUCRF Super QuickSuper User Guide - Single Employer October 2017 states that the direct debit request will be instigated after 4pm each day ^[44] Exhibit 2, Tribunal Book, ST5, page 70, Document A05. . Accordingly, there was a very real risk the contribution may not be received by LUCRF Super until Monday 1 July:

3. In my work I was trained to understand that if cleared funds were withdrawn from an account before 4.00pm, they would take up to three (3) working days to reach the intended account, with day one (1) being the day funds are actually withdrawn from the account.

4. My experience of payments that I processed at Bank of NSW, was that if a payment was made by 4pm Wednesday that it would be cleared funds in the recipient's account by Friday, with day one (1) being Wednesday, day two (2) being Thursday and day three (3) being Friday.^[45] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.

42. The Respondent submits that the contemporaneous information available to the Applicant at the time he made the relevant contribution, supports the Respondent's view. The supplementary guide 'Paying for Contributions'^[46] Exhibit 2, Tribunal Book, ST19, page 143, Response to Summons to Produce from Westpac. provides guidance as to the clearance periods of direct debits contributions:

"If we debit your account on a Monday, the debit will be considered cleared on the Thursday (assuming that Tuesday, Wednesday and Thursday are banking days)."

The Respondent also submits that the same processing timeframe applied for the receipt and clearance of funds from when LUCRF was to receive the payment.^[47] Exhibit 2, Tribunal Book, ST19, page 144, Response to Summons to Produce from Westpac.

43. The contemporaneous QuickSuper Employer Terms and Conditions state under the heading 3.1 Processing Payments:

a. At the end of each Banking Day, Westpac will calculate the total bulk value required to be processed for the Participating Employer and (subject to clause 2.6(d) of this Agreement) process a Direct Debit in the amount of that total bulk value to the Nominated Account.

b. … (EFT)

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c. The Participating Employer acknowledges that Westpac will hold the value for three (3) Banking Days after the bulk debit was processed to the Nominated Account in the case of DDR payments….^[48] Exhibit 2, Tribunal Book, ST19, page 158, Response to Summons to Produce from Westpac.

44. The Applicant's account was debited on Wednesday 26 June 2019. According to this guide, the debit will be considered cleared on Monday 1 July 2019 and credited to LUCRF Super on the same day.

45. Further, as stated above (paragraph 6) an employer signing up for QuickSuper is required to accept the Westpac Quick Super terms and conditions before being able to make contributions via the clearing house.

46. The LUCRF Super Clearing House Service Terms and Conditions document dated 1 July 2017^[49] Exhibit 2, Tribunal Book, ST23, page 499, LUCRF Super Clearing House Service Terms and Conditions document dated 1 July 2017. , states that:

You are responsible for ensuring that your contribution data and payments are accurate, complete and provided in sufficient time to be forwarded to the elected fund in accordance with any legislative or fund requirements. You need to consider processing times (as set out in the QuickSuper Terms and Conditions) to allow sufficient time for your payment to reach the destination fund.

47. The information available to the Applicant would have indicated that a contribution initiated via QuickSuper on Wednesday 26 June 2019 could take up to until Monday 1 July 2019 to be processed and received by LUCRF Super.

48. The Applicant states that at the time of making the contribution he was not aware that an electronic funds transfer (EFT) payment to a superannuation fund takes less time to process than a direct debit.^[50] Exhibit 2, Tribunal Book, ST2, page 58, Document A02. The Applicant also states that he did not know there was any kind of specific delay between when the contribution was made and when it is credited by the superannuation fund. ^[51] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.

49. The Respondent respectfully submits that there was enough information available to the Applicant to inform himself of the different clearance periods for the differing methods of paying a contribution. The supplementary guide Paying for Contributions includes a comparative table for direct debit and EFT methods of payment which states that the clearance period for EFT payments is only one banking day and instructs customers to "choose this option when the shorter clearance period is important to you".^[52] Exhibit 2, Tribunal Book, ST19 – 136, Response to Summons to Produce from Westpac.

50. The Respondent submits that the Applicant did not take the necessary steps to ensure the contribution instigated on 26 June 2019 was received by LUCRF Super in the 2019 financial year. Documents such as the User Guide and supplementary guide Paying Contributions and contact details for LUCRF Employer Services were available from the QuickSuper home screen when logging on.^[53] Exhibit 2, Tribunal book, ST22, page 423, Response to Summons to Produce from Australian Financial Complaints Authority. The Applicant could have sought clarification about processing time and payment options that would have ensured his payment was received on time (Rawson).

51. This view is supported in LUCRF's response to the Applicant's AFCA complaint, which states that the Applicant was provided with the QuickSuper Employer Terms and Conditions, was able to access it at any time and would have been aware of the processing timeframes.^[54] Exhibit 2, Tribunal book, ST22, page 454, Response to Summons to Produce from Australian Financial Complaints Authority. These are the terms and conditions referred to in the paragraph 43 which provide a clear explanation on how the processing times operate for contributions.

52. The Applicant submits that the result of his complaint with AFCA is confirmation that the previous wording was misleading, and in this case lead the Applicant to inadvertently not allowing enough time for the payment to process.^[55] Exhibit 3, Applicant’s Statement of Facts Issues and Contentions, page 3. The Respondent submits that this is not the case. The recommendation given to LUCRF from AFCA was in in favour of LUCRF and they are not required to take any corrective action. ^[56] Exhibit 2, Tribunal book, ST22, page 468-471, Response to Summons to Produce from Australian Financial Complaints Authority.

… has produced copies of several disclosure documents where it provides information regarding the direct debit clearance period… I am satisfied the trustee has provided sufficient and meaningful disclosure regarding the clearance period for the direct debit payments and how it is applied.

ATC 11226
53. Similarly, in the determination made by AFCA, it was stated 'I am also satisfied the complainant knew or should have known that the bank:

will hold the value for three (3) Banking Days after the bulk debit was processed to the Nominated Account (emphasis added). ^[57] Exhibit 2, Tribunal book, ST22, page 491, Response to Summons to Produce from Australian Financial Complaints Authority.

54. The Applicant concluded incorrectly that the contribution would be received before the end of the financial year. It has consistently been observed that an innocent mistake or ignorance of the law does not, in itself, constitute special circumstance and nor do simple errors, albeit innocent errors or other mistakes which are made in good faith.^[58] Liwszyc v Commissioner of Taxation 2014 ATC ¶20-441 at [77] ; Tran v Commissioner of Taxation 2012 ATC ¶10-236 at [15] . The Respondent also submits that ignorance of practice, including ignorance of the mechanism by which funds are paid into an individual's superannuation fund is not a "special circumstance" (Rawson).

55. The Applicant contends that his intention was for the contribution to be attributed to the 2018-19 financial. The Commissioner submits having an intention to have a contribution attributed to a certain financial year, where the intention does not eventuate in reality, does not amount to special circumstances. In Rawson, while quoting Member Hughes in Chantrell v Commissioner of Taxation, paragraphs [31] to [32]^[59] Chantrell v Federal Commissioner of Taxation [2012] AATA 179 at [31] . states:

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…

56. The above statement by Member Hughes is applicable to the Applicant in this matter. There is no dispute that the Applicant intended for the contribution to be attributed to the 2018-19 financial year. Where the Applicant failed, was to take adequate steps to ensure that this was done.

57. Consequently, while the Applicant's intention may have been clear he failed to take the necessary steps to ensure his desired outcome.^[60] Rawson v Federal Commissioner of Taxation 2012 ATC ¶10-250 , [93] .

58. The Applicant has further contended that he had taken over the payroll matters within the company and submitted the contributions on 26 June 2019 in the knowledge that his accountant, who was at the time unwell, was aware that he intended on making them that day and did not advise him to make the payment at an earlier date.

59. The Applicant chose not to engage another accountant given the health of his accountant, but in that case he could have confirmed when the contribution needed to be made, to ensure it was received on or before the end of the 2018-19 financial year, from the publicly available information available or taken other steps, such as contacting LUCRF Super. Ultimately the Applicant decided, on the implied advice of his accountant and his previous banking experience, to initiate the contribution on 26 June 2019.

60. There is no evidence of the discussion between the Applicant and his accountant as to the advice sought or obtained. For example, it is possible the accountant could have understood the Applicant to be referring to 'superannuation payments' as superannuation obligations with regard to SG contributions for the Applicant and his employees which, for the SG quarter ending 30 June 2019, were not required to be paid until 28 July 2019.

61. In any event even if the Applicant received incorrect advice, and there is no evidence of the nature of the advice received, incorrect or deficient advice is not considered to constitute special circumstances ^[61] Federal Commissioner of Taxation v Dowling 2014 ATC ¶20-447 at [108] ; Davenport and Commissioner of Taxation [2012] AATA 760 , [79] ; Brady and Commissioner of Taxation [2016] AATA 97 at [44] and [49] ;

62. The Commissioner contends that any financial consequences that flow from an excess contribution are not, of themselves, special circumstances. Special circumstances need to be found beyond the actual rate imposed and beyond the specific

ATC 11227
conditions which give rise to that rate being imposed.^[62] Mills and Federal Commissioner of Taxation [2017] AATA 362 , [50]; (2017) 105 ATR 216 ; Re Verschuer and Federal Commissioner of Taxation [2013] AATA 12 at [61]; (2013) 88 ATR 991 . This means that, for example, the financial consequences from an excess contribution that arose out of acting on a misunderstanding of the law, or incorrect advice will not be special circumstance, where that misunderstanding or incorrect advice itself does not amount to special circumstances. Not knowing the law, or the fact that a person is mistaken or unaware of the consequences does not, on its own, amount to special circumstances.^[63] Practice Statement Law Administration PS LA 2008/1 , paragraph 1.

63. In any event the Commissioner disputes the Applicant's contention that the tax impost as a result of the excess contributions is harsh. The tax amount of $17,156 is a consequence of the application relevant legislative provisions to the taxation of the ENCC. The Applicant can apply for an extension of time to make an election to release the ECC from his super fund, which will reduce the ENCC to nil.

64. Further, the ECC are included in the individual's income tax return and assessed at the individual's marginal rate (with an offset to account for tax paid on the contributions by the superannuation fund). This is comparable to the tax treatment that would have applied had the Applicant received the amount salary sacrificed as salary or wages.

65. The Applicant has cited Bornstein v Commissioner of Taxation ^[64] Bornstein V Commissioner of Taxation [2012] ATA 424 . in contending that his case is also a perfect storm of events leading to an unjust outcome. The decision in Bornstein was decided on the particular facts of that case and when taken together they were found to constitute special circumstances. This is different to the present case for a number of reasons:

a. The ambiguity in Bornstein was in respect of ATO information on an employer's quarterly superannuation obligation and how an employer could make employee contributions up until 28 July and still have those amounts credited to the quarter ending the previous June but the ATO information did not address within the same content what an employee could do. In this case, the Applicant does not contend the ATO's information was ambiguous but rather that the material provided about the QuickSuper product and LUCRF Super was ambiguous as to how long the processing time would take. However, on a plain reading of the LUCRF Super QuickSuper User Guide, it is apparent that the submitted direct debt request made on 26 June 2019 would be instigated after 4pm on 26 June 2019 and there would be an additional processing time of up to 3 business days following this such that it would have been highly likely that the payment would not be received by the LUCRF Super until after 30 June 2019 if the full 3 days was taken.

b. It is not clear and no evidence has been provided by the Applicant as to the specific advice being sought and the attempts made to contact his tax agent.

c. It is unclear what advice the Applicant was waiting upon given the Applicant's witness statement that he believed the contribution summary made on 26 June 2019 would result in the contribution arriving before the end of 30 June 2019.^[65] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.

66. The Applicant contends that AFCA took LUCRF to the Department of Fair Trading for misleading information on their website.^[66] Exhibit 3, Applicant’s Statement of Facts Issues and Contentions, page 3. The Respondent submits that beyond this statement, the Applicant has not provided any evidence to suggest that the Department of Fair Trading was involved. Additionally, the nothing in the materials provided by AFCA under the summons demonstrates that AFCA referred the matter to the Department of Fair Trading. However, the Respondent notes in AFCA's investigation they did note that the wording of the website in relation to making a contribution may be interpreted differently. Stating that 'it's possible many others interpret three business days to start on the date of payment as they would look at the information on the website.' ^[67] Exhibit 2, Tribunal book, ST22, page 480, Response to Summons to Produce from Australian Financial Complaints Authority. The Respondent submits that this is one of various possibilities to interpret when three business days would commence. The Respondent submits that as outlined in paragraphs 37 to 44 a more reasonable interpretation is one where the first business day would not occur until the following day.

ATC 11228
67. It is the Commissioner's view that the circumstances contended by the Applicant and addressed above in these submissions, when looked at in their entirety cannot be considered unusual, uncommon or exceptional. Ultimately, all the circumstances considered, it was the Applicant's decision to make the relevant contributions so close to the end of the financial year and then assume, despite the publicly available information available and his own banking experience, that the contributions would be received by the superannuation fund by the end of the financial year. The fact that the contribution was received on 1 July 2019 was not exceptional as it was received within the normal processing times. Further the tax consequences flowing from the excess contribution are not harsh as contended by the Applicant.

68. Further, while the Applicant's experience of the circumstances that resulted in the contribution not being received on or before 30 June 2019 may be unique to him, as observed by Member Lazanas in Brady v Federal Commissioner of Taxation ^[68] Brady v Federal Commissioner of Taxation 2016 ATC ¶10-240 . , of the decision in Tran v the Commissioner of Taxation, it is the circumstances that must be special, not merely the individual's experience of them.

Object of Division 291

69. Division 291 is designed to ensure, in relation to concessional contributions, that the amount of concessionally taxed superannuation benefits that an individual receives results from contributions that have been made gradually over the course of that individual's life.^[69] Liwszyc v Commissioner of Taxation [2014] FCA 112 , [78].

70. The Commissioner submits it would not be consistent with the object of Division 291 for the Commissioner make a determination to disregard or reallocate to another financial year the contributions received by LUCRF Super on 1 July 2019. The Applicant did not initiate the contribution until very close to the end of the financial year and proceeded to make further concessional contributions on the assumption that the contribution would have been received before the end of the financial year. The object of Division 291 would not be fulfilled if contributions exceeding the caps were not effectively discouraged.

71. This view is supported in Chantrell ^[70] Chantrell v Federal Commissioner of Taxation [2012] AATA at [34] . where it was determined 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…"

72. The imposition of excess contributions tax is an intended consequence of the Division where excess contributions have been made in a financial year. The tax both discourages excess contributions and neutralizes the benefit that excess contributions would confer on a member of a fund.^[71] Paget v Federal Commissioner of Taxation [2012] AATA 334 at [103] .

Reasonably foreseeable that a contribution would result in excess concessional contributions

73. The Commissioner may have regard to whether it was reasonably foreseeable, when a relevant contribution was made, that the Applicant would have excess concessional contributions for the relevant financial year, especially the extent to which the individual had control over the making of the contribution ^[72] Subsection 291-465(3) of the ITAA 1997. .

74. The relevant contribution in this case is the contribution received by LUCRF Super on 5 August 2019 as that is the contributions which caused the Applicant to exceed his concessional contributions cap for the 2019-20 financial year.

75. The Applicant contends that he did not know at the time of making the August 2019 contribution that the contribution initiated on 26 June 2019 was not received by his fund until 1 July 2019 as he had not received an annual statement from LUCRF Super and he did not have online access to his LUCRF account.

76. Given how close to the last business day of the 2018-19 financial year that the Applicant initiated the contribution and the information publicly available about time required for processing of a direct debit payment, it was, when viewed objectively, reasonably foreseeable that that

ATC 11229
contribution would not have been received by LUCRF Super on or before 30 June 2019.

77. Further, it was reasonably foreseeable that subsequent contributions made to LUCRF Super on 5 August 2019 would exceed the concessional contributions cap. The Applicant may not have received an annual statement from LUCRF Super but a prudent person would have taken steps to confirm the date contribution initiated on 26 June 2019 was actually received by his fund. This could have been achieved by contacting LUCRF Super before making the August 2019 contribution.

The Applicant's control over the making of the contributions

78. The amount of control the Applicant had over the making of the contributions is a relevant consideration in determining whether a contribution should be more appropriately allocated to another financial year ^[73] Lynton v Commissioner of Taxation [2012] AATA 667 , [21] ; Rawson v Federal Commissioner of Taxation 2012 ATC ¶10-250 , [109] . .

79. In this case the Applicant was the sole director of Kelseal and:

i. had control over the amount and the timing of the contribution;

ii. had information available from which he could have concluded that a contribution initiated on 26 June 2019 may not be received by LUCRF Super until 1 July 2019;

iii. could have sought confirmation from LUCRF Super of the date the contribution initiated on 26 June 2019 was received by the fund before making further contributions;

iv. could have controlled the amount of further contributions that were made in the 2019-20 financial year.

80. Further, the contribution received by LUCRF Super on 5 August 2019 was comprised of both salary sacrifice and SG amounts. The salary sacrifice amount (comprising the majority of the contribution) could have been reduced by the Applicant, as it was entirely within his control and there is no legal obligation to make such contributions.

37. The Respondent contended that the Applicant failed to discharge his burden under section 14ZZK(b)(ii) of the TAA 1953 of proving that the objection decision should not have been made or should have been made differently and as such the objection decision dated 8 April 2021 should be affirmed.^[74] Exhibit 5, Respondent’s Outline of Submissions, paragraphs 81-82. I do not have this exhibit.

CONSIDERATION

38. It is not in dispute that the Applicant made excess concessional contributions to his superannuation fund in the 2019-2020 financial year. The dispute is whether or not the discretion provide by section 291-465 of the ITAA 1997 should be exercised to reallocate excess concessional contributions to the 2018-2019 financial year.

39. The discretion provided by section 291-465(1) of the ITAA 1997 is not unfettered. In
Commissioner of Taxation and Dowling [2014] FCA 252, Greenwood J provided:^[75] While Greenwood J was specifically making reference to the discretion provided by section 292-465 of the ITAA 1997 that discretion is the same discretion as under section 291-465 of the ITAA and as such is equally applicable to the current matter.

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 be 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.

94. These 292-465(3)(a) and (b) considerations are absolute pre-conditions to the exercise of the discretion.

40. As such, in determining whether the discretion provided by section 291-465(1) of the ITAA 1997 should be exercised the Tribunal must be satisfied that special circumstances exist and that making a determination is consistent with the objects of Divisions 291 and 292 of the ITAA 1997.

41. As outlined above the ITAA 1997 does not provide a definition of what constitutes special circumstances, however that concept has been considered in a number of Federal Court and Tribunal decisions. The Tribunal agrees with the precedents set out above that for circumstances to constitute special circumstances they must be circumstances that are unusual, uncommon or exceptional,

ATC 11230

markedly different from the usual run of cases, special or out of the ordinary and include events which would render the strict application of the rule in questions unfair, inappropriate or unjust.

42. The Applicant's case is that special circumstances apply in his case as he had understood that in making a direct debit payment for his superannuation through QuickSuper on 26 June 2019 that it would be received by his superannuation fund by at the latest 29 June 2019, however that is not what occurred. The Applicant contended that his circumstances constituted special circumstances because:

• The trained bookkeeper left, and he had to do the accounts himself.
• His accountant at the time had been unwell and did not provide appropriate advice.
• The LUCRF super website was misleading.
• The payment being transferred through four sets of hands after he made the payment, the timing of each transfer being outside of his control.
• His superannuation balance was above the transfer balance cap, leading to the imposition of not just $5,237.51 tax but $17,156.16 tax.
• He did all that he could to have the transaction processed in time with the information provided to him.

43. The Tribunal, having reviewed the material before it, does not accept the contentions made by the Applicant that his circumstances constitute special circumstances for the purposes of exercising the discretion provided by section 291-465 of the ITAA 1997 to reallocate his excess concessional contributions to the earlier year.

44. While the Applicant provided that he had banking experience and had kept up to date with banking practices, his understanding of the processing time of a direct debit in the relevant circumstances was incorrect. The Applicant contended that he had an understanding that once money left an account it would be in the receiving account within 3 business days starting from the day of transfer. The Applicant further contended that it was not clear from the information provided by LUCRF super that his understanding was incorrect.

45. The Tribunal agrees with the contentions set out above by the Respondent in relation to the material available to the Applicant from QuickSuper and LUCRF Super. There was nothing unusual about the time taken to process the Applicant's payment made on 26 June 2019. Further, while the Tribunal accepts that the Applicant made a complaint about that material of which he contends led to information being updated to add further clarity, it does not think that when read wholistically, the material before the Tribunal is ambiguous regarding payment processing times. In any event, an error on the part of a third party will not on its own amount to special circumstances.^[76] Liwiszyc v Commissioner of Taxation [2007] FCA 112 , [77] .

46. The Tribunal accepts that the Applicant genuinely intended that his superannuation contribution would be received by his fund by 30 June 2019 and that if he had of been aware that to achieve that by the payment made on 26 June 2019, he should have used a different payment method he would have.

47. A genuine mistake or ignorance of the law or procedures does not however amount to special circumstances.^[77] Liwiszyc v Commissioner of Taxation [2007] FCA 112 , [77] and Tran and Commissioner of Taxation [2012] AATA 123 at [15] .

48. There is no corroborating evidence before the Tribunal that the Applicant's accountant at the time provided any advice in relation to the payment method that should have used by the Applicant on 26 June 2019. Further, the Tribunal notes that the Applicant was aware of his former accountant's health issues and the need to make his superannuation payments and have them received by the fund by 30 June 2019. Despite that knowledge, the Applicant waited until 26 June 2019 to meet with his former accountant and sort out his superannuation affairs.

49. As such the Tribunal does not accept that the advice of the Applicant's former accountant was necessarily the cause of the Applicant's circumstances. In any event, an error on the part of a third party or incorrect or deficient financial advice from a third-party professional will not on its own satisfy the requirements for special circumstances.^[78] Liwiszyc v Commissioner of Taxation [2007] FCA 112 , [77] ; Kerr and Commissioner of Taxation [2007] AATA 1732 at [34]-[35] ; Mills and Commissioner of Taxation [2017] AATA 362 at [44]-[45] ; Davenport and Commissioner of Taxation [2012] AATA 760 at [79] ; Re Lynton and Commissioner of Taxation [2012] AATA 667 at [17] ; Brady and Commissioner of Taxation [2016] AATA 97 at [44] .

50. In reviewing the evidence before it, the Tribunal considers that in circumstances where the Applicant was making a contribution in

ATC 11231

such close proximity to the cut-off date, with an appreciation of the importance of that cut-off date, it is reasonable to expect that he would have checked that the payment was received as intended regardless of what he thought he understood about payment timeframes. This is particularly the case where the Applicant himself stated that he had taken over doing the payroll with no training and has subsequently asserted that the information available to him by QuickSuper and LUCRF Super were, to him, unclear.

51. The Tribunal accepts and agrees with the following contentions made by the Respondent with regards to the impost of taxation that resulted from the excess contributions:^[79] Exhibit 5, Respondent’s Outline of Submissions, paragraphs 63-65.

63. In any event the Commissioner disputes the Applicant's contention that the tax impost as a result of the excess contributions is harsh. The tax amount of $17,156 is a consequence of the application relevant legislative provisions to the taxation of the ENCC. The Applicant can apply for an extension of time to make an election to release the ECC from his super fund, which will reduce the ENCC to nil.

64. Further, the ECC are included in the individual's income tax return and assessed at the individual's marginal rate (with an offset to account for tax paid on the contributions by the superannuation fund). This is comparable to the tax treatment that would have applied had the Applicant received the amount salary sacrificed as salary or wages.

65. The Applicant has cited Bornstein v Commissioner of Taxation in contending that his case is also a perfect storm of events leading to an unjust outcome. The decision in Bornstein was decided on the particular facts of that case and when taken together they were found to constitute special circumstances. This is different to the present case for a number of reasons:

a. The ambiguity in Bornstein was in respect of ATO information on an employer's quarterly superannuation obligation and how an employer could make employee contributions up until 28 July and still have those amounts credited to the quarter ending the previous June but the ATO information did not address within the same content what an employee could do. In this case, the Applicant does not contend the ATO's information was ambiguous but rather that the material provided about the QuickSuper product and LUCRF Super was ambiguous as to how long the processing time would take. However, on a plain reading of the LUCRF Super QuickSuper User Guide, it is apparent that the submitted direct debt request made on 26 June 2019 would be instigated after 4pm on 26 June 2019 and there would be an additional processing time of up to 3 business days following this such that it would have been highly likely that the payment would not be received by the LUCRF Super until after 30 June 2019 if the full 3 days was taken.

b. It is not clear and no evidence has been provided by the Applicant as to the specific advice being sought and the attempts made to contact his tax agent.

c. It is unclear what advice the Applicant was waiting upon given the Applicant's witness statement that he believed the contribution summary made on 26 June 2019 would result in the contribution arriving before the end of 30 June 2019.

[Footnotes omitted]

52. The Tribunal accepts that the effect of the circumstances on the Applicant are unfortunate however, that is insufficient to render the imposition of the excess contributions tax as unjust, unreasonable, or inappropriate to constitute special circumstances.^[80] Chantrell and Commissioner of Taxation [2012] AATA 179 , [32] .

53. The Tribunal finds that the Applicant's circumstances when considered as a whole, while unfortunate, are not unusual, uncommon, or markedly different from the usual run of cases where payments are made in close proximity to cut-off dates but do not arrive on the intended day. While the situation was new to the Applicant, it is the circumstances that must be special not the individuals experience of them.^[81] Tran and Commissioner of Taxation [2012] AATA 123 , [15].

54. The Tribunal is not satisfied that special circumstances exist in relation to the Applicant making excess concessional contributions in the 2019-2020 financial year. As such the Tribunal

ATC 11232

finds that the discretion in section 291-465(1) of the ITAA 1997 is not enlivened.

55. Having made this finding, the Tribunal does not need to consider the other factors that must or may be considered in determining whether the discretion is enlivened and if so should be exercised. For completeness, regarding those considerations the Tribunal accepts and agrees with the contentions set out by the Respondent above.

56. Consequently, the Tribunal refuses to exercise the discretion in section 291-465(1) of the ITAA 1997 to make a written determination reallocating the Applicant's excess concessional contributions from the 2019-2020 financial year to the 2018-2019 financial year.

CONCLUSION

57. For the reasons set out above, the Tribunal is not satisfied that the criteria to exercise the discretion provided by section 291-465 of the ITAA 1997 to reallocate the Applicant's excess concessional contributions from the 2019-2020 financial year to the 2018-2019 financial year are met.

58. Consequently, the Tribunal is not satisfied that the Applicant has discharged his onus of proof to establish that the objection decision should not have been made or should have been made differently.

59. Accordingly, the decision under review is affirmed.

Footnotes

^[1] Exhibit 1, T Documents, T18, page 54, Notice of Objection Decision; and T2, pages 5-7, Reasons for Decision.
^[2] Exhibit 1, T Documents, T18, page 54, Notice of Objection Decision.
^[3] Exhibit 1, T Documents, T13, pages 42-43, ASIC Search for Kelseal dated 22 February 2021.
^[4] Exhibit 5, Respondent’s outline of submissions, pages 2-3.
^[5] Exhibit 3, Applicant’s Statement of Facts, Issues and Contentions, pages 1-5.
^[6] Exhibit 2, Tribunal Book, ST3, page 59, A03 Document.
^[7] Exhibit 2, Tribunal Book, ST-5, pages 62-73, A05 Document.
^[8] Exhibit 2, Tribunal Book, ST5, page 63, A05 Document and ST 22 , page 421 Registration process Step 12.
^[9] Exhibit 2, Tribunal Book, ST5, page 70, A05 Document.
^[10] Westpac ceased to offer direct debit as a method of payment to Quick Super from September 2020.
^[11] Exhibit 2, Tribunal Book, ST4, page 61, A04 Document.
^[12] Exhibit 1, T Documents, T3, page 9, MATS report received on 25 July 2019 and T6, pages 14-15, MATS report received on 25 July 2019.
^[13] Exhibit 1, T Documents, T4, page 11, MATS report received on 8 August 2019 and T7, MATS report received on 8 August 2019.
^[14] Exhibit 2, Tribunal Book, ST11, page 91, A10 Document.
^[15] Exhibit 1, T Documents, T8, page 18, Excess concessional contributions determination for the year ended 30 June 2020.
^[16] Exhibit 1, T Documents, T9, pages 22-25, Notice of amended assessment for the year ended 30 June 2020.
^[17] Exhibit 1, T Documents, T10, pages 26-29, Application dated 5 November 2020 and T11, page 30, Letter from the Applicant dated 5 November 2020.
^[18] Exhibit 1, T Documents, T12, page 38, Excess non-concessional contributions determination for the year ended 30 June 2020.
^[19] Exhibit 1, T Documents, T16, pages 46-48, Notice of decision for Application – excess contributions determination.
^[20] Exhibit 1, T Documents, T17, Objection to Application dated 8 March 2021.
^[21] Exhibit 1, T Documents, T18, Notice of objection decision.
^[22] Exhibit 1, T Documents, T1, pages 1-4, Application for Review.
^[23] Exhibit 2, Tribunal Book, ST2, page 58, Statutory Declaration of the Applicant dated 11 March 2022 and Exhibit 4, Statutory Declaration of the Applicant.
^[24] Section 14ZLof the TAA 1953.
^[25] Section 14ZY of the TAA 1953.
^[26] Section 14ZZ of the TAA 1953.
^[27] Section 291-1 of the ITAA 1997.
^[28] Section 291-460 of the ITAA 1997.
^[29] Section 292-465 of the ITAA 1997 contains the same special circumstances discretion as found in section 291-465 of the ITAA 1997, however, refers to non-concessional contributions rather than concessional contributions.
^[30] Exhibit 2, Tribunal Book, ST2, pages 57-58, A02 Document.
^[31] Exhibit 4, Statutory Declaration of the Applicant.
^[32] Exhibit 3, Applicant’s amended Statement of Facts, Issues and Contentions.
^[33] Exhibit 3, Applicant’s amended Statement of Facts, Issues and Contentions, page 5.
^[34] Exhibit 5, Respondent’s Outline of Submissions, paragraphs 35-80.
^[35] Taxation Ruling TR 2010/1 Income Tax: Superannuation contributions , paragraph 183 to 186.
^[36] Chantrell v Commissioner of Taxation [2012] AATA 179 at [19] to [21].
^[37] Liwszyc v Federal Commissioner of Taxation 2014 ATC ¶20-441 [69] .
^[38] Chantrell v Commissioner of Taxation [2012] AATA 179 at [31] .
^[39] Rawson v Commissioner of Taxation [2012] AATA 322 at [91] .
^[40] Paget v Federal Commissioner of Taxation [2012] AATA 334 at [94] .
^[41] Hope v Commissioner of Taxation [2014] AATA 877 at [98] .
^[42] Exhibit 2, Tribunal Book, ST22, pages 444-445, Response to Summons to Produce from Australian Financial Complaints Authority.
^[43] Exhibit 2, Tribunal Book, ST9, page 89, Document A08.
^[44] Exhibit 2, Tribunal Book, ST5, page 70, Document A05.
^[45] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.
^[46] Exhibit 2, Tribunal Book, ST19, page 143, Response to Summons to Produce from Westpac.
^[47] Exhibit 2, Tribunal Book, ST19, page 144, Response to Summons to Produce from Westpac.
^[48] Exhibit 2, Tribunal Book, ST19, page 158, Response to Summons to Produce from Westpac.
^[49] Exhibit 2, Tribunal Book, ST23, page 499, LUCRF Super Clearing House Service Terms and Conditions document dated 1 July 2017.
^[50] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.
^[51] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.
^[52] Exhibit 2, Tribunal Book, ST19 – 136, Response to Summons to Produce from Westpac.
^[53] Exhibit 2, Tribunal book, ST22, page 423, Response to Summons to Produce from Australian Financial Complaints Authority.
^[54] Exhibit 2, Tribunal book, ST22, page 454, Response to Summons to Produce from Australian Financial Complaints Authority.
^[55] Exhibit 3, Applicant’s Statement of Facts Issues and Contentions, page 3.
^[56] Exhibit 2, Tribunal book, ST22, page 468-471, Response to Summons to Produce from Australian Financial Complaints Authority.
^[57] Exhibit 2, Tribunal book, ST22, page 491, Response to Summons to Produce from Australian Financial Complaints Authority.
^[58] Liwszyc v Commissioner of Taxation 2014 ATC ¶20-441 at [77] ; Tran v Commissioner of Taxation 2012 ATC ¶10-236 at [15] .
^[59] Chantrell v Federal Commissioner of Taxation [2012] AATA 179 at [31] .
^[60] Rawson v Federal Commissioner of Taxation 2012 ATC ¶10-250 , [93] .
^[61] Federal Commissioner of Taxation v Dowling 2014 ATC ¶20-447 at [108] ; Davenport and Commissioner of Taxation [2012] AATA 760 , [79] ; Brady and Commissioner of Taxation [2016] AATA 97 at [44] and [49]
^[62] Mills and Federal Commissioner of Taxation [2017] AATA 362 , [50]; (2017) 105 ATR 216 ; Re Verschuer and Federal Commissioner of Taxation [2013] AATA 12 at [61]; (2013) 88 ATR 991 .
^[63] Practice Statement Law Administration PS LA 2008/1 , paragraph 1.
^[64] Bornstein V Commissioner of Taxation [2012] ATA 424 .
^[65] Exhibit 2, Tribunal Book, ST2, page 58, Document A02.
^[66] Exhibit 3, Applicant’s Statement of Facts Issues and Contentions, page 3.
^[67] Exhibit 2, Tribunal book, ST22, page 480, Response to Summons to Produce from Australian Financial Complaints Authority.
^[68] Brady v Federal Commissioner of Taxation 2016 ATC ¶10-240 .
^[69] Liwszyc v Commissioner of Taxation [2014] FCA 112 , [78].
^[70] Chantrell v Federal Commissioner of Taxation [2012] AATA at [34] .
^[71] Paget v Federal Commissioner of Taxation [2012] AATA 334 at [103] .
^[72] Subsection 291-465(3) of the ITAA 1997.
^[73] Lynton v Commissioner of Taxation [2012] AATA 667 , [21] ; Rawson v Federal Commissioner of Taxation 2012 ATC ¶10-250 , [109] .
^[74] Exhibit 5, Respondent’s Outline of Submissions, paragraphs 81-82. I do not have this exhibit.
^[75] While Greenwood J was specifically making reference to the discretion provided by section 292-465 of the ITAA 1997 that discretion is the same discretion as under section 291-465 of the ITAA and as such is equally applicable to the current matter.
^[76] Liwiszyc v Commissioner of Taxation [2007] FCA 112 , [77] .
^[77] Liwiszyc v Commissioner of Taxation [2007] FCA 112 , [77] and Tran and Commissioner of Taxation [2012] AATA 123 at [15] .
^[78] Liwiszyc v Commissioner of Taxation [2007] FCA 112 , [77] ; Kerr and Commissioner of Taxation [2007] AATA 1732 at [34]-[35] ; Mills and Commissioner of Taxation [2017] AATA 362 at [44]-[45] ; Davenport and Commissioner of Taxation [2012] AATA 760 at [79] ; Re Lynton and Commissioner of Taxation [2012] AATA 667 at [17] ; Brady and Commissioner of Taxation [2016] AATA 97 at [44] .
^[79] Exhibit 5, Respondent’s Outline of Submissions, paragraphs 63-65.
^[80] Chantrell and Commissioner of Taxation [2012] AATA 179 , [32] .
^[81] Tran and Commissioner of Taxation [2012] AATA 123 , [15].

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