Yet again an Administrative Appeals Tribunal (AAT) decision has shown the importance of dates and payment methods for avoiding making excess contributions to superannuation. This is particularly the case when making super contributions around the end of the financial year.
As described in the case of Hope and Commissioner of Taxation  AATA 877, Mr and Mrs Hope were both directors and employees of their company. Part of Mrs Hope’s responsibilities was as bookkeeper, including payroll and making superannuation contributions. On the 30th of June 2008 $88,000 of superannuation contributions were transferred from the company bank account to the super funds of Mr and Mrs Hope, $42,000 and $46,000 respectively. These payments were made via the MYOB Clearing House using the M-Powered Superannuation system to two different APRA-regulated superannuation funds. However these amounts were received by the super funds on the 3rd and 4th of July 2008.
Then, on 30 June 2009, more superannuation contributions were made, of $38,000 and $40,000. These contributions were received by their superannuation funds before the end of the financial year, triggering excess concessional contributions.
The Hopes objected to the resulting assessment for excess contributions tax, which the ATO Commissioner disallowed, and they applied to the AAT for a review of that decision and if the Commissioner should have disregarded the excess contributions or allocate them to another financial year.
The Hopes argued before the AAT that they were unaware that amounts transferred from the business account would not be received on the same day. Generally payments to suppliers were received on the same day. However, the annual statements from their superannuation fund show that amounts transferred in May and June were received in July. When Mrs Hope was asked about the fund statements the tribunal was told that:
She probably had not even opened any such statement. She was not monitoring the payments that were made. Their accountant reviewed the payments. Mrs Hope said that she was told what amounts to transfer to the superannuation funds. She did not know why payments were made to one superannuation fund and not another at any particular time. Perhaps they were naïve, she said, but they were following advice.
The contributions made 30 June 2009 were recorded by the fund as received on the same day by the super funds. This was because, on the advice of their financial adviser, the Hopes had written a cheque, which their adviser arranged to be hand-delivered to the super fund’s office. The adviser thought:
that there was no difference between the time at which a contribution made by means of an electronic transfer of funds would be taken to have been made to a superannuation fund and the time at which it would be taken to have been made if a cheque were presented to it. He thought that the contributions would each be taken to have been made at the same time i.e. at the time the person authorises the electronic transfer and the time of the presentation of the cheque.
The Tribunal found that there was not special circumstances in this case. The Hopes “were not newcomers to superannuation contributions” and being too busy to review statements from superannuation funds “cannot be regarded as something that takes them outside the circumstances of very many in the community who find themselves in the same position.”
See Special circumstances for excess contributions tax for more examples of when the AAT has, and hasn’t, found there to be special circumstances in cases of excess contributions to superannuation.
Want to be kept up-to-date with SMSF and Superannuation changes – why not subscribe to our Newsletter?
This article, as with all content on this site, is for informational purposes only, and is not legal, financial, tax or other advice. Please read our Terms and Conditions of Use.