Sent: 09-10-2012 15:30:03
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ATO and excess non-concessional contributions tax assessment
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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