Hamad and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2012/0487)
Judgment date: 9 August 2012
Date published: 28 November 2012

Summary of decision:
Outlines the ATO's response to this case which concerned the exercise of the discretion to disregard or allocate to another year one or more superannuation contributions made to relieve the taxpayer from excess concessional contributions tax.

Overview of facts:
The taxpayer had a long-standing salary sacrifice agreement with his employer under which he agreed to forgo certain amounts of salary in exchange for superannuation contributions made by his employer. The agreement did not require the employer to make the relevant contributions at any particular time. | The taxpayer was paid his wages once a month. The taxpayer's payslip recorded the amount of salary sacrificed to fund the employer superannuation contribution. The payslip also separately showed the amount the employer was required to contribute to meet its superannuation guarantee obligations. | The taxpayer received member statements from his superannuation fund twice each financial year for the periods ending 31 December and 30 June. | The employer usually made contributions to the taxpayer's superannuation fund in the month following the sacrifice. However in respect of the salary sacrificed amounts for the months of April, May and June 2009, the employer made a single contribution in July 2009 (after the end of the relevant financial year). | The taxpayer sought review of the Commissioner's decision not to allocate amounts received by the superannuation fund in July 2009 to June 2009. The taxpayer contended that he had had 15 months' worth of superannuation contributions made for him in the 2009-10 financial year as his employer had paid the salary sacrifice contributions for the months of April, May and June 2009 in July 2009. | The taxpayer stated that he was aware of the concessional contributions cap and had tried to stay within it by monitoring his payslips and adjusting his level of salary sacrifice amounts to remain within the relevant caps. His payment summary for the 2009-10 year also supported his belief that his employer had paid only $40,000 in salary sacrifice contributions to his fund for the year. | The taxpayer stated he did not consider the member statement received from his superannuation fund showing when contributions were received by his fund in relation to the periods ending 30 June 2009 or 31 December 2009 when adjusting the salary sacrifice agreement during the 2009-10 financial year. | Issues decided by the Tribunal | The Tribunal had to determine two issues: 1) Whether special circumstances existed under paragraph 292-465(3)(a) of the Income Tax Assessment Act 1997 (ITAA 1997); and 2) Whether making a determination to disregard or to allocate to another year certain of the employer contributions would be consistent with the object of Division 292 of the ITAA 1997 as provided in section 292-5 of ITAA 1997? | 1) Whether special circumstances existed under paragraph 292-465(3)(a) of the Income Tax Assessment Act 1997 (ITAA 1997); and 2) Whether making a determination to disregard or to allocate to another year certain of the employer contributions would be consistent with the object of Division 292 of the ITAA 1997 as provided in section 292-5 of ITAA 1997? | As to first issue, the Tribunal stated at [21] that " special circumstances do exist in this matter in that, despite his checking his payment advices, the taxpayer was positively misled by his employer, improperly in my opinion, retaining amounts directed to superannuation and making late payments ". | As to the second issue, the Tribunal at [16] stated it would be consistent with the object of Division 292 to allocate the contributions to the earlier financial year as "[ the taxpayer's ] behaviour confirms he was building up his superannuation by making gradual contributions over the course of his life, as the division intends ". | Accordingly, the Tribunal set aside the Commissioner's objection decision and decided the employer contributions (both superannuation guarantee and salary sacrifice) received by the superannuation fund in July 2009 should be allocated to the financial year ended 30 June 2009.

Issues decided:
The Tribunal had to determine two issues: 1) Whether special circumstances existed under paragraph 292-465(3)(a) of the Income Tax Assessment Act 1997 (ITAA 1997); and 2) Whether making a determination to disregard or to allocate to another year certain of the employer contributions would be consistent with the object of Division 292 of the ITAA 1997 as provided in section 292-5 of ITAA 1997? 1) Whether special circumstances existed under paragraph 292-465(3)(a) of the Income Tax Assessment Act 1997 (ITAA 1997); and 2) Whether making a determination to disregard or to allocate to another year certain of the employer contributions would be consistent with the object of Division 292 of the ITAA 1997 as provided in section 292-5 of ITAA 1997? As to first issue, the Tribunal stated at [21] that " special circumstances do exist in this matter in that, despite his checking his payment advices, the taxpayer was positively misled by his employer, improperly in my opinion, retaining amounts directed to superannuation and making late payments ". As to the second issue, the Tribunal at [16] stated it would be consistent with the object of Division 292 to allocate the contributions to the earlier financial year as "[ the taxpayer's ] behaviour confirms he was building up his superannuation by making gradual contributions over the course of his life, as the division intends ". Accordingly, the Tribunal set aside the Commissioner's objection decision and decided the employer contributions (both superannuation guarantee and salary sacrifice) received by the superannuation fund in July 2009 should be allocated to the financial year ended 30 June 2009.

ATO view of decision:
The Commissioner will continue to consider each application for the exercise of the discretion in section 292-465 of the ITAA 1997 on its merits. This will involve an examination of the evidence of the contributions made; whether an excess was reasonably foreseeable, including taking into account the control a taxpayer has over the amount; and the timing of any particular contribution, as these are matters the Parliament has chosen to prescribe may be taken into account. | In this case, the Tribunal considered the relevant matters and reached conclusions consistent with its findings on the facts. In particular, the Tribunal accepted that the Taxpayer controlled the amount of the contribution. The Tribunal made findings as to the amounts to be contributed at [8]. However it must also be implied from the statement in [21] that the employer " improperly ... retained amounts directed to superannuation " that the Tribunal found the taxpayer did not control the timing of the contributions. It is therefore clear that the Tribunal took account of the taxpayer's capacity to control the timing and amount of the contributions.

Administrative treatment:
Implications for ATO Precedential documents (Public Rulings & Determinations etc) | Nil. | Implications for Law Administration Practice Statements | Nil.

Legislative references: Income Tax Assessment Act 1997 (ITAA 1997) 292-465
Case references: Bornstein and Commissioner of Taxation [2012] AATA 424 2012 ATC 10-257 Kuyper and Commissioner of Taxation [2012] AATA 282 Leckie and Commissioner of Taxation [2012] AATA 129 82 ATR 975 Longcake and Commissioner of Taxation [2012] AATA 576 2012 ATC 10-270 McMennemin and Commissioner of Taxation [2010] AATA 573 2010 ATC 10-145 79 ATR 898 Naude and Commissioner of Taxation [2012] AATA 130 Paget and Commissioner of Taxation [2012] AATA 334 2012 ATC 10-251 Peaker and Commissioner of Taxation [2012] AATA 140 2012 ATC 10-238 Rawson and Commissioner of Taxation [2012] AATA 322 2012 ATC 10-250 Schuuurmans-Stekhoven and Commissioner of Taxation [2012] AATA 62 82 ATR 731 Tran and Commissioner of Taxation [2012] AATA 123 2012 ATC 10-236
Subject references: Excess contributions tax Excess concessional contributions tax