Excess super contributions: a case with a twist
This case involved a taxpayer who deposited $430,000 into his super fund. When the GFC hit, he panicked and withdrew half. Six months later he reconsidered, and redeposited another $100,000. He thought on a net contribution basis, he was OK given that he had withdrawn about $200K. Unfortunately for him, the ATO and AAT disagreed. Facts The taxpayer in this case is a retired public servant. Wanting to manage his financial resources carefully and provide for his future, he paid $430,000 into his AGEST super account in the course of the 2007/08 financial year. He liked the AGEST super fund because he could regularly check on the performance of the various funds in which his money was invested, and move money about when he thought there was an advantage in doing so. He also liked the fact he was able to withdraw the money at short notice. The Global Financial Crisis (GFC) disrupted all of this. The equity markets in which the taxpayer’s funds were invested dropped precipitously as the crisis took hold. He felt he was losing thousands of dollars a day at the height of the crisis and withdrew about half of the money in his superannuation account on 29 September 2008. The taxpayer’s appetite for risk appeared to return the following year and, on 16 September 2009, he paid $100,000 (in other words, half of the money he had taken out of his super account in September 2008) back into his AGEST super account. In evidence, the taxpayer agreed he did not ask his super fund any questions about breaching the non-concessional contributions cap. He said that he was generally aware the government was encouraging individuals to save money through the super system to fund their retirements. He said it did not occur to him there would be a tax problem because – as far as he was concerned – he was simply returning the super fund money he had taken out earlier. The Commissioner said the taxpayer tipped over the $450,000 contributions limit when he deposited the $100,000 payment within the three-year period following the initial contribution of $430,000. The Commissioner assessed the taxpayer to excess contributions tax on the $80,000. Decision As nothing in the legislation referred to net contributions and as there were no special circumstances, as the taxpayer had contributed $530,000 for capping purposes, the AAT member had no choice but affirm the Commissioner’s assessment.
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