Penalty for late superannuation contribution

The Federal Court has affirmed an excess superannuation contributions tax assessment issued to an individual after finding there were no “special circumstances” to warrant reallocating excess concessional contributions that had been received late via BPAY.

The Court heard that the bookkeeper of the individual’s employer had made two payments on 30 June 2009 via BPAY to the individual’s superannuation fund, and that those payment were received by the fund on 1 July 2009. The Court also heard that the bookkeeper had mistakenly made an early payment to the individual’s superannuation fund on 27 May 2010, which was meant for the following financial year.

As a result of these payments, the total amount of funds received by the superannuation fund in the 2009–2010 financial year exceeded the individual’s $50,000 concessional contributions cap for the year.

The individual argued that there were “special circumstances” and that the Commissioner should reallocate the two late payments to the 2008–2009 financial year, and the 27 May 2010 payment to the 2010–2011 financial year.

However, the Court said late BPAY payments did not amount to “special circumstances”. Further, simple errors such as making a contribution too early also did not amount to “special circumstances”. The Court was also of the view that the individual had been in a position to ensure that the contributions were made in the correct year.

TIP: A taxpayer who has contributed above his or her concessional or non-concessional contributions caps can apply to the Commissioner to exercise his discretion to disregard or reallocate excess contributions for a financial year. However, it should be noted that the discretion is not easy to obtain.

Individuals should consider keeping track of contributions and avoid making last-minute contributions that could be allocated to the next financial year. Individuals with salary-sacrifice arrangements should carefully identify the timing of superannuation payments relating to wages accrued for the June quarter (or June month). Please contact us for further information.

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