As reported by Super & Financial Services Alert, published by Thomson Reuters, the tribunal upheld an assessment for excess contributions tax arising from an attempt to make a super contribution on the last day of a financial year.

The facts in this particular tribunal case would reflect the experiences of many other fund members as a financial year draws to a close.

On June 30, 2009, the fund member's employer "initiated" an electronic funds transfer of an $8,285.71 salary-sacrificed contribution into the member's account with a large super fund.

But the fund did not receive the contribution until July 1, 2009. In turn, this led to an excess contribution of $4,954 for the following year and an assessment for excess contributions tax of $1,560.

In its decision, the tribunal addressed two fundamental issues:

• When a superannuation contribution is "made".
• Whether the tax commissioner should have exercised his discretion under tax law to ignore the excess contribution or attribute it to another financial year if "special circumstances" are involved.

The member argued before the tribunal that the contribution had been "made" "as soon as his employer had done everything necessary to effect an electronic funds transfer of the amount" to his super fund.  

However, the tribunal found that a contribution was "made" when the money was "actually received by the superannuation fund and credited to the superannuation fund's account".

And the tribunal found that special circumstances did not exist to warrant the exercising of the commissioner's discretion to disregard the excess contribution or allocate the amount to another financial year.

"... it is not unusual, exceptional or uncommon that an electronic transfer of funds requested on June 30, 2009 was not received by the fund until July 1, 2009," the tribunal stated.

This is unquestionably a time of the year for super fund members to exercise particular caution when making super contributions - whether or not you agree with the tribunal's decision in this case.

Read the tribunal's decision in the above case.

By Robin Bowerman
Smart Investing
Principal & Head of Retail, Vanguard Investments Australia

19th June 2012