Central Coast Accountants

Mistaken Belief Does Not Revoke Excess Super Tax Bill

Published on March 6, 2013 at 12:00 AM

A taxpayer has been unsuccessful before the AAT in arguing that her “mistaken belief” as to the timing of a superannuation contribution was a “special circumstance” that warranted reallocating excess superannuation contributions to an earlier financial year.

The taxpayer had started salary sacrificing in 2005 to build up her superannuation balance, which was relatively low due to her work patterns being affected by child care responsibilities over her working life. The taxpayer exceeded her $25,000 concessional contributions cap for 2009–2010 by $3,398 and was issued with an excess contributions tax assessment of $1,070.The issue in dispute centred around an employer contribution that was made on 3 July 2009, but which was attributed to the 2009–2010 financial year.

The taxpayer was under the mistaken belief that an employer contribution made before 28 July would be treated as a concessional contribution for June 2009 and therefore allocated to the 2008–2009 year. The taxpayer argued that the timing of the contribution was beyond her control. She also claimed that the superannuation law could not have been intended to adversely affect women in her situation who have had child caring responsibilities.

Although the AAT was sympathetic, it nevertheless upheld the Tax Commissioner’s decision not to reallocate the contribution because it found that the taxpayer’s “mistaken belief” as to the timing of concessional contributions did not, in its view, constitute the “special circumstances” that are required under the superannuation law in order to reallocate a contribution.

TIP: This case highlights the need for individuals to know when their super contributions are being paid into their super fund by their employer. Individuals should also consider checking their salary sacrifice arrangements to see if there is an agreement as to when salary sacrifice amounts will be transferred by their employer to their super fund. Please contact our office if you have any questions.