The Federal Court has overturned one of the few Administrative Appeals Tribunal (AAT) cases that found special circumstances exist for an excess contribution assessment. In FCT v Dowling there were two relevant contributions. First, a non-concessional contribution of $156,142 made by the taxpayer’s husband in the 2009 year for the purposes of increasing his age pension entitlement. This contribution was made as a result of free advice from Centrelink and a public offer super fund. The contribution triggered the bring forward rule for the taxpayer. Second, a $200,000 non-concessional contribution in the 2011 year under a recontribution strategy which caused the taxpayer to exceed her non-concessional cap under the bring forward rule.

The Federal Court overturned the AAT’s finding that special circumstances existed for the first contribution. This was on the basis that there was no excess contribution in the 2009 year and therefore no discretion existed. In any event, the Court found that no special circumstances existed for the 2009 year as the circumstances were not “out of the ordinary case”. In addition, the Court found that no special circumstances existed for the 2011 year as the contribution was again not out of the ordinary case. Finally, the Court found that the 2009 contribution (being a lump sum sourced from her husband’s account) was not consistent with the object of making contributions gradually over the taxpayer’s lifetime.

For further information please contact Phil Broderick.

Phil Broderick
Principal
Sladen Legal
+61 3 9611 0163  |  +61 419 512 801
pbroderick@sladen.com.au