Heffron's Blog is a collection of comments related to the latest superannuation comings and goings.
Muted response to administrative change on ECT
by Meg Heffron
Has anyone else been surprised at the generally calm and quiet response to the ATO’s recent indication that they will use their administrative powers to do something sensible on excess contributions tax?
They quietly let it be known at the last Superannuation Consultative Committee meeting (as reported by Peter Burgess of SPAA) that they will now apply a “de minimis” test in deciding whether or not to raise an assessment for excess contributions tax. Literally, de minimis is an abbreviated form of a Latin expression : de minimis non curat lex (the law shouldn’t be concerned about little things – justification for courts not considering minor issues). Essentially they will look at situations on a case by case basis and where a very small problem has resulted in a very large bill (say excess contributions tax on $150,001 when someone makes non-concessional contributions of $150,001 in year 1 and $450,000 in year 2) they will consider simply not issuing an assessment.
This is quite different to exercising the Commissioner’s discretion to ignore or reallocate contributions under special circumstances. No change has been made there either legislatively or in terms of the ATO’s interpretation of their discretion. Cases continue to make their way through the Administrative Appeals Tribunal where taxpayers take offence to being told that their circumstances are not special. (So far the ATO has a perfect record – the AAT has agreed with their view on whether or not the case is “special” in every situation.)
It sounds to me like de minimis is really an administrative power they have to ignore the law (now that’s power).
I’ve been surprised that the ATO hasn’t been loud and proud about this one – they have worn most of the vitriol on behalf of the Government and Treasury for some very bad law so one would think they would want to take some credit for recognising stupidity and doing what they can about it.
I’ve also been surprised at the relatively quiet public response – but I suspect that it’s simply because it’s not widely known.
Or perhaps we are all recognising it for what it is – a back door way of getting part way to fixing some of the really silly outcomes of the excess contributions tax legislation (discussed in this blog many times – I won’t bore you by doing it again). It won’t be transparent – no magic formula will be produced to help taxpayers identify whether they will be saved or not and it’s not something that can be applied for. Instead, anyone who feels they have made a small error which has escalated into a major tax problem will just have to cross their fingers and hope.
Actually, when we look at it in that light, it’s not really very good at all! How long before the Government actually fixes the law itself?