Non-concessional contribution balances

If the May 2016 Super Changes proceed and the $500,000 lifetime non-concessional contribution cap becomes a reality (but we await changes on this issue) – then it will be vital to know a taxpayer’s non-concessional contribution balance (“NCC balance”).

The ATO has recently announced that tax agents will be able to access their client’s NCC balance via a new tax agent’s portal.  The portal is currently operational and already the ATO has responded to NCC balance enquiries.

Generally, the enquiry will provide details of NCCs from the 2007/08 up to the 2014/15 financial year.  The aggregate balance is broken down on a financial year by financial year basis.

The balance enquiry is only up to 30 June 2015 and so does not include non-concessional contributions made on or after 1 July 2015 (presumably the ATO is still receiving contribution information for the 2015/16 financial year).

While the provision of this service is welcomed, some issues arise.  First,will taxpayers be able to contact the ATO directly for the NCC balance?  Possibly, but the issue will be the difficulty of determining the identity of the inquirer to the satisfaction of the ATO for the ATO to release the information.  Secondly, the information released will not be up-to-date (as 2015/16 year NCCs may not be advised to the ATO until late 2016 or early 2017).  Lastly, there will be the issue of the amount of reliance which can be placed on the balance information.  

To illustrate the point, assume that the ATO reports that the NCC balance (up to 30 June 2015) of a taxpayer is $75,000.  The taxpayer, in reliance on that information, makes a $425,000 non-concessional contribution because the taxpayer knowns that the taxpayer has made no non-concessional contributions in the period since 1 July 2015.  What are the consequences if the $75,000 figure is incorrect and should have been $200,000?   Presumably, the ATO will have to apply the correct figure and treat $225,000 of the $425,000 as excess non-concessional contributions.  At best the ATO may waive any penalty or interest change due to the reliance on the incorrect information.  However the ATO, in the absence of express statutory authority, disregard the correct balance and apply a different balance.