Harald Strasser and Commissioner of Taxation

[2012] AATA 33

[2012] AATA 33

Division	SMALL TAXATION CLAIMS TRIBUNAL
File Number(s)	2011/4354
Re	Harald Strasser
APPLICANT
And	Commissioner of Taxation
RESPONDENT

DECISION

Tribunal	Senior Member S E Frost
Date	20 January 2012
Place	Sydney

The objection decision is affirmed.

..................[sgd]......................................................

Senior Member S E Frost

CATCHWORDS

TAXATION – excess superannuation contributions – concessional contributions – tax payable – objection decision affirmed.

LEGISLATION

Income Tax Assessment Act 1997: ss 292-15, 292-25, 295-160

Income Tax Rates Act 1986: s 26
Superannuation (Excess Concessional Contributions Tax) Act 2007: s 5

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REASONS FOR DECISION

Tribunal	Senior Member S E Frost
Date	20 January 2012

1. This is a case about excess superannuation contributions tax.

2. During the 2010 financial year (the Relevant Year), contributions totalling $52,659.98 were made into Mr Strasser’s superannuation fund.  Those contributions were made for Mr Strasser by his employer.  They are included in the fund’s assessable income because of item 1 in the table in s 295-160 of the Income Tax Assessment Act 1997 (ITAA).  As a result they are “concessional contributions” of Mr Strasser: s 292-25(2) of the ITAA.

3. In the Relevant Year Mr Strasser’s “concessional contributions cap” was $50,000: s 292-20 of the Income Tax (Transitional Provisions) Act 2007.  Because his “concessional contributions” exceeded his “concessional contributions cap”, Mr Strasser became liable to excess concessional contributions tax: s 292-15 of the ITAA.

4. Mr Strasser accepts that he exceeded the concessional contributions cap for the Relevant Year.  He accepts that the amount of the excess is $2,659.98.  He accepts that he is liable to excess concessional contributions tax.  What he does not accept is that he should pay the amount of excess contributions tax that the Commissioner has assessed.

5. The reason he is taking that position arises in this way.  On 19 April 2011 the Commissioner wrote him a letter about the excess superannuation contributions tax.  The purpose of the letter was to inform him that he had exceeded his contributions cap.  The letter told him what his “concessional contributions cap” was, what the total amount of his “concessional contributions” was, and what the excess was.  Each of those pieces of information was correct.  The letter was also correct when it stated:

   Tax payable

   You will be taxed:

   ·        31.5% on any amount over the concessional contributions cap

   ·        46.5% on any amount over the non-concessional contributions cap.

6. It is that last statement about “Tax payable” that has led to this dispute between Mr Strasser and the Commissioner.  Mr Strasser’s “reasons for objection” explain his position (original emphasis):

   Correspondence from the ATO has always stated that tax payable on any amount over the concessional contributions tax (sic – should be “cap”) will be 31.5%.

   Please refer to your correspondence dated 19^th April 2011 for example, wherein it states on page 2 (copy attached)

   “TAX PAYABLE

   You will be taxed:

   ·        31.5% on any amount over the concessional contributions cap”

   I was never advised that this tax is additional to the 15% I have already paid when making my personal contributions.  If I had known I would have been more diligent and ensured I did not exceed the cap.  I was never advised by the ATO that I would pay tax of 31.5% in addition to the 15% I have already paid.  I feel I have been incorrectly informed by the ATO.

   As a result I feel misled and respectfully request that I pay an additional tax of 16.5% not 31.5%.  The additional 16.5% tax is calculated by deducting the 15% I have already paid from the 31.5% stated by the ATO.

7. There are four points to make about Mr Strasser’s concern.  The first is that by focusing on one portion of the Commissioner’s letter of 19 April 2011 Mr Strasser has failed to pay attention to the full message conveyed by the correspondence.  The letter had said earlier (my emphasis):

   Caps apply to contributions made to your super.  Any contributions to super over the cap amounts are subject to extra tax.  The cap amount and how much extra tax you pay once you exceed it, depends on whether the contributions are concessional or non-concessional.

8. In context, the expression “Tax payable” used later in the letter of 19 April 2011 is meant to convey the idea of “extra tax payable”.

9. The second point is that his claim that he has “already paid” 15% on the contributions is not correct.  He did not pay any tax at all on the employer’s contributions.  If tax was paid it was paid not by Mr Strasser but by the super fund, and in any event, it was not paid on his contributions (which are included in the fund’s assessable income) but on the fund’s taxable income (assessable income less allowable deductions): s 26 of the Income Tax Rates Act 1986.

10. The third point is that his suggestion that things would have been different if he had not been “incorrectly informed by the ATO” needs to be qualified.  It may be that, if he had been aware that the full 31.5% was payable on excess contributions (rather than, as he thought, 16.5%), then he would have been more careful about how close he was getting to the contributions cap that applied to him.  He may, for example, have adjusted the percentage of his salary that he was sacrificing to superannuation.  But of course the letter of 19 April 2011 could not have had any influence on his state of mind during the Relevant Year, which was long since finished by the time that letter issued.  In any event, during the hearing Mr Strasser indicated that, before implementing his strategy of increasing his super balance through salary sacrificing, he had spoken to a financial adviser.  If Mr Strasser has been to any extent “incorrectly informed”, then his interaction with the financial adviser is likely to have been a contributor – either through things that the financial adviser did not say to Mr Strasser, or things that Mr Strasser did not hear.

11. The fourth point is that, even if the letter was misleading (which, in my opinion, it was not), the Commissioner is nevertheless under a duty to apply the law as it is written.

12. The assessment is correct. The “excess concessional contributions” have been accurately quantified, and the correct tax rate of 31.5% imposed, in accordance with s 5 of the Superannuation (Excess Concessional Contributions Tax) Act 2007.

13. The objection decision is affirmed.

I certify that the preceding 13  paragraphs are a true copy of the reasons for the decision herein of Senior Member S E Frost.

..........[sgd]..............................................................

Associate

Date of hearing	13 January 2012
Applicant	In person
Advocate for the Respondent	Mr S Gordon, ATO Legal Services