A recent ruling from the Administrative Appeals Tribunal (AAT) in regard to an excess contributions situation for a self-managed superannuation fund (SMSF) has served to reinforce the power the panel has in relation to these matters.
The decision was in relation to the legal case between McMennemin and the Commissioner of Taxation which dealt with a situation where Frank and Dianne McMennimen were deemed to have made excess contributions to their SMSF.
The circumstance arose when both members made an initial contribution of $138,484 to the fund on 14 December 2006 and then subsequently each made a further $1 million contribution on 30 June 2007.
As a result the Commissioner of Taxation determined both individuals had exceeded their non-concessional contributions cap by $33,371 and subsequently made an assessment that each was liable to pay $15,518 in excess contributions tax.
The McMennemins applied to have the excess contributions disregarded or re-allocated under sections 292-495 of the Income Tax Assessments Act but this request failed because the commissioner couldn't find the special circumstances necessary to invoke this type of ruling.
The McMennemins then took their case to the AAT to review the commissioner's decision not to grant any relief under sections -495 of the Income Tax Assessments Act.
"The AAT held we don't have the jurisdiction to review the commissioner's determination because, they said, this is not a decision relevant the assessment," DBA Lawyers director Daniel Butler.
"As it happens you get assessed, then you ask the commissioner to be nice and the asking to be nice is a separate matter outside of the AAT's jurisdiction," he explained.
The AAT conceded the McMennemins did not intend to exceed the contributions caps but that fact alone would not satisfy the definition of special circumstances to have the excess contributions disregarded or re-allocated.
