Applicant v FCT [2013] AATA 111 - ATO not there to warn taxpayers of excess contributions - contribution caps are self regulatory

The taxpayer contributed $320,000 as non-concessional contributions in the 2007/08 financial year.  As the taxpayer was under age 65, the “bring forward” was triggered.

The taxpayer then contributed $170,000 in respect of the 2008/09 financial year.  The taxpayer in her personal return for that year did not make any claim for a tax deduction in respect of superannuation contributions.  The taxpayer lodged her 09 return on 26 November 2009.

The ATO determined that in respect of the 2008/09 financial year that the taxpayer exceeded her non-concessional contributions cap by $40,000.

The taxpayer claimed that she lodged a notice of intention to claim a tax deduction with the super fund in October 2008 for an amount of $40,000.  The super fund was an APRA regulated fund.  Ultimately it was accepted that the taxpayer in fact did not lodge a notice with the super fund.

The taxpayer contended that she was a contractor (and not an employee) and therefore could have claimed a deduction for the $40,000 (albeit possibly reduced as her taxable income was less than $40,000), she intended to claim a deduction and would have claimed a deduction if the requisite processes had been attended to in the proper way.  Further, the taxpayer claimed that the ATO did not advise her in a timely manner that there were excess contributions.

As the ATO had before, the AAT declined to exercise the discretion to disregard excess contributions.

The AAT observed that the discretion is not provided and is not to be exercised to overcome administrative defects such as the failure to provide the relevant tax deduction notice to the super fund. 

The AAT could also have added that the discretion is not provided to overcome procedural issues such as not being entitled to claim a tax deduction for super contributions or, if entitled, having insufficient taxable income against which to offset the deduction if it were allowable.

However the AAT did say (as paragraph 40)

“The contention that the Applicant’s circumstances are special because the Commissioner did not notify her of the excess until after the period for giving the s290-170 notice had expired cannot be accepted.  It does not amount to a special circumstance.  The system is one of self regulation.”