Why we must all exercise great care with super at year end
Editor: This case involves a taxpayer being penalised with excess contributions tax (ECT) because payments that his bookkeeper was supposed to make in the 2009 and 2011 years inadvertently all ended up in the 2010 year. As is often the case with ECT, this all ended in tears.
The taxpayer was the sole director of his company and a member of a superannuation fund with AMP Life Limited.
On 30 June 2009, his bookkeeper made two payments by Bpay to his AMP account, one salary sacrifice payment of $30,000 and an employer contribution of $8,499 for the 2008/09 year.
However, each of the two payments was received by AMP and applied to the taxpayer’s AMP account on 1 July 2009.
On 27 May 2010, the bookkeeper made a payment of $13,970.66 as a salary sacrifice payment to his AMP account. This payment was incorrectly paid several weeks early as it was meant to be paid in July 2010.
In September 2011, the Commissioner issued a notice of assessment for ECT of $16,905.20 in respect of excess concessional contributions of $53,667.42 for the year ended 30 June 2010.
Editor: Long story short – the taxpayer objected, was knocked back, and then appealed to the Federal Court. Basically, the Judge disallowed the appeal saying that, as the taxpayer was in a position to supervise and control the actions of the bookkeeper, he was responsible for the mistakes that she had made.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.