Excess Contributions Tax – Sutton and Commissioner of Taxation  AATA 661
The Administrative Appeals Tribunal (AAT) has upheld a decision by the Commissioner of Taxation that a taxpayer exceeded the non-concessional contributions cap in the 2010/11 financial year.
In 2010/11 the taxpayer lodged a ‘Notice of intent to claim a tax deduction’ of $50,000 in respect of contributions made in that year. Prior to claiming the deduction, the taxpayer was assessed as having adjusted taxable income of $13,468 in 2010/11.
In the year ending 30 June 2009, the taxpayer made a personal non-concessional contribution to her superannuation fund of $450,000.
As she was over 50 years old on 30 June 2011, her concessional contributions cap for that year was $50,000. The taxpayer was issued with an amended assessment for the 2011 year as her adjusted taxable income of $13,468 was reduced to zero by a deduction claim for ‘reportable superannuation contributions’ of the same amount.
The concessional contribution exceeded the taxpayer’s adjusted taxable income ($13,468) for that year and therefore the taxpayer was issued with an ECT assessment in respect of $36,532 in excess of her non-concessional cap.
The AAT said that the amount of personal superannuation contribution deduction that is allowable in a particular year is limited to the adjusted assessable income of the taxpayer under s 26-55(2) of ITAA 1997.
This was so even though the allowable deduction may be lower than the cap on concessional contributions for that year or lower than the total concessional contributions made. Thus, if the concessional contribution exceeded the taxpayer’s adjusted taxable income, the balance was not allowable as a deduction and it was to be treated as a non-concessional contribution.
The AAT concluded that, by operation of s 292-90(1) of ITAA 1997, the part of the taxpayer’s concessional contribution that was not allowable as a deduction ($36,532) was a non-concessional contribution for the year ending 30 June 2011. As the taxpayer made a non-concessional contribution of $450,000 to the Fund in the year ending 30 June 2009, the applicable non-concessional contribution for the year ending 30 June 2011 was nil. As a result, the amount of $36,532 was to be treated as an excess non-concessional contribution in that year so that excess non-concessional contributions tax was payable under s292-80.