KXCS and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered the case of KXCS and the Commissioner of Taxation concerning an assessment for Division 293 tax for the 2017-2018 income year. The applicant, KXCS, received a redundancy payout and payments for accrued annual and long service leave shortly before the end of the financial year. This lump sum payment increased their assessable income and superannuation contributions to $257,546, exceeding the $250,000 threshold for Division 293 tax. The applicant sought a review of the objection decision that confirmed their liability for this additional tax.

The primary legal issues before the Tribunal were whether there was any discretion to exercise under Division 293 of the *Income Tax Assessment Act 1997* (ITAA 1997) to relieve the applicant of the Division 293 tax liability, and whether the circumstances of their redundancy constituted "special circumstances" that warranted such relief. The applicant argued that the timing of their redundancy and payout was unfair and that a similar discretion to consider special circumstances, as available under Division 291 of the ITAA 1997, should apply to Division 293.

The Tribunal affirmed the Commissioner's decision, finding that Division 293 of the ITAA 1997 is designed to reduce the concessional tax treatment of superannuation contributions for high-income individuals and does not contain an express statutory discretion to consider special circumstances. The Tribunal noted that payments for unused annual and long service leave are assessable income in the year they are received, regardless of whether they relate to past income years. While acknowledging the applicant's understandable distress regarding the timing of the payout, the Tribunal distinguished the present case from situations where discretion might be exercised under other Divisions, such as Division 291, which has an equivalent provision for considering special circumstances. The Tribunal concluded that there was no basis to disregard the income received in the 2017-2018 financial year or to exercise a discretion that does not exist within Division 293.