In the decision of Mackie v Commissioner of Taxation (Taxation) [2024] AATA 619 (3 April 2024), the Administrative Appeals Tribunal (Tribunal) affirmed the decision of the Commissioner to decline to exercise the discretion in section 291-465(1) of the Income Tax Assessment Act 1997 (Cth) (ITAA 97) to disregard or allocate to another year the taxpayer’s concessional superannuation contributions.

Although not referenced in the Tribunal Decision, ATO ruling TR 2010/1 states the following position at paragraphs 182 and 183:

General rule – a contribution is made when received by the fund

182. A superannuation contribution is made when the capital of the fund is increased. As explained in paragraphs 183 to 210 of this Ruling, the contribution may be made when an amount is received, or ownership of an asset is obtained or the fund otherwise obtains the benefit of an amount.

Contributions of funds

183. A contribution of funds as cash or an electronic funds transfer, is made when the amount is received by the superannuation provider or credited to the relevant account.

The taxpayer here made two superannuation contribution payments on 30 June – one on 30 June 2018 for $15,000 and another on 30 June 2019 for $30,000. Both of these payments, while processed on 30 June where not received by the super fund until after that date (ie the following financial year). It was the taxpayer’s intention that those contributions be attributed in the respective years the payments were made rather than on the dates they were received.

The ATO assessed him such that the contributions were made on the dates the funds were received by his superannuation fund, that is, on 4 July 2018 and 11 July 2019 respectively, which placed each transaction over the end of financial year into the next financial year as shown below with other contributions he made.

The taxpayer requested to the Tribunal that either the $30,000 contribution be disregarded or the payments be recorded by the ATO as having been contributed on the date of payment initiation, rather than the date of receipt of funds by his superannuation fund. This request is shown below.

An argument for special circumstances was considered and rejected by the Tribunal, stating at paragraph 38:

38. The one matter that has troubled me is whether the effect of Mr Mackie’s ‘mistake’ or ‘naïve misunderstanding’ is such that it produced an unfairness to Mr Mackie so far as the fact that he was required to pay tax on his contributions and was required to pay the excess contributions charge. But the application of the legislation will in all cases that do not involve special circumstances result in those things happening. In the end, borrowing the words of Senior Member Muller, the circumstances here are not so unusual or unforeseen such that the strict application of the legislation results ‘in an unjust, unreasonable or inappropriate result; a result that the legislation did not intend’.

The Tribunal Member mentioned (emphasis added) and left open the possibility that a transaction taking more than a week to clear may be grounds for special circumstances but this was not the case here as the payments were sent one day before the new financial year and therefore could not be expected to be received by his superannuation fund that same day, given both days were on a weekend.

32. It also may be accepted that Mr Mackie intended for the transfers of money to be concessional superannuation contributions for the 2018 and 2019 tax years respectively. That, of course, misfired because the Fund did not receive the money until the following tax year such that the contributions were not ‘made’ in the years that they were intended by Mr Mackie to have been made. In some respects that is hardly surprising given that each transaction was initiated on a Saturday or a Sunday, days which are not ordinarily regarded as business days. Again, as the transactions were undertaken on a weekend there is not much unusual about the transaction happening on one day and the contributions being received a day or days later.

36. I should observe that the fact that second transactions took 11 days to find its way to the Fund does not at all change things because even if it had been processed the next business day, the contribution would have been made in the same financial year. The position may have been much different if, for example, Mr Mackie had undertaken the transaction two or three business days before the end of the financial year relying upon the advice in the How to Guide, only to find that it took 11 days to find its way to the Fund. That is a circumstance far removed from what happened here. The fact that the transaction took 11 days after 30 June 2019 does not on its own or in combination with other circumstances satisfy me that there are special circumstances.

This case serves as an example to send superannuation contributions payments well before 30 June in order for the contribution to be received by your superannuation fund in the current financial year.

For further information please contact:
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au

Terence Wong
Senior Associate
T +61 3 9611 0112 l M +61 0458 846 022
E twong@sladen.com.au