Issue: 319
Sent: 09-10-2012 15:30:03
In this issue:

Swan Attacks Cranks and Crazies The Essential SMSF Guide 2012-13ATO and excess non-concessional contributions tax assessment
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ATO and excess non-concessional contributions tax assessment

Click here to buy - A How To Book of SMSF's by Tony Negline
Tony Negline

On 2 October the Administrative Appeals Tribunal rejected an application from a taxpayer against an excess non-concessional contributions tax assessment.

The person in question, Mr Lynton, had breached the $450,000 rule over three financial years. He claimed that his was a special case because he was suffering financial hardship and that his error (which resulted in him owing just over $10,000 in excess contributions tax) was caused by a simple oversight.

"Although he did not labour the point, the applicant also alluded to the fact that his accountant had not cautioned him against exceeding the aggregate contributions cap in the year in question," said the written judgement.

The taxpayers financial hardship was caused by, "supporting two adult children and five grandchildren; a commitment to provide for his wife who was significantly younger in years; the impact of the global financial crisis on his personal finances; and, specifically, the consequences of a failed investment opportunity".

The Tribunal said that the "special circumstances" provisions that allow an excess contributions tax assessment to be ignored are "challenging". That would have be an understatement.

Mr Lynton was unsuccessful in arguing his case. The AAT said it is sympathetic to a person's personal challenges but "put simply, such circumstances are not what the legislation contemplates when it refers to special circumstances. The legislation contemplates circumstances which are inconsistent with a natural and foreseeable sequence of events. It does not contemplate circumstances which are of special significance to the taxpayer but not unique to an individual in the taxpayer's position."

The need for reform in this area is vital. A suitable lifetime contribution cap is needed as I have argued before in my DIY Supe column in The Australian.

The Essential SMSF Guide

My book which I first self-publishing in 2009 will now be published by Thomson Reuters as 'The Essential SMSF Guide". Thomson Reuters are responsible for distributing the book (which is now up to date to 30 June 2012). The book is also endorsed by the Institute of Chartered Accountants. Further details are available here:

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This email is general in nature only and does not constitute or convey specific or professional advice. Legislation changes may occur quickly. Formal advice should be sought before acting in any of the areas discussed. Be aware that the information in these articles may become innaccurate with time. Responsibility is disclaimed for any inaccuracies, errors or omissions. Particular investments are neither invited nor recommended and hence this publication is not "financial product advice" as defined in Section 766B of the above legislation. All expressions of opinion by contributors are published on the basis that they are not to be regarded as expressing the official opinion of any other person or entity unless expressly stated. No responsibility for the accuracy of the opinions or information contained in the contributor's articles is accepted by any other person or entity. Copyright: This publication is copyright. If you wish to reproduce this article you require a license, which can be purchased here, to do so.

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