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The Administrative Appeals Tribunal has affirmed the Commissioner’s decision to tax a taxpayer’s excess superannuation contributions at the rate applicable to excess contributions, and not to exercise his discretion to disregard the excess or allocate it to another year.

The taxpayer contributed over $678,000 into his superannuation funds over a three year period when the statutory limit was $450,000. The taxpayer asked the Commissioner to exercise his discretionary power under s 292-465 of the Income tax Assessment Act 1997 to disregard the excess or allocate it to another year so that the excess amount would not be taxed at the higher rate.

The taxpayer said that he misunderstood the rules and would not have made the excess contributions if he had understood the true position. He said the misunderstanding was effectively induced by erroneous advice he received from the ATO in 2010 and 2011. He also referred to a number of matters that explained the miscalculation, including the pressures associated with acting as a carer for an elderly friend and the confusion arising out of his attempts to establish a self-managed superannuation fund.

The Tribunal was not persuaded on the evidence that the taxpayer made the excess contributions as a result of advice he received from the ATO, or that the taxpayer acted in reliance upon it.

The Tribunal was also not persuaded that special circumstances existed to warrant the exercise of the Commissioner’s discretion under s 292-465. Further, the exercise of the discretion in this case would not be consistent with the objective of Div 292 of the ITAA 1997. The object of the Division, in relation to non-concessional contributions to superannuation, is 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. In this case, the contributions were not made gradually over the course of the taxpayer’s life, but were made towards the end of his working life.

Re Sisely and FCT [2014] AATA 411 (Bernard J McCabe SM, 24 June 2014).

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