The Lander & Rogers Superannuation Alert is a brief overview of new developments in the superannuation industry.

  • On 4 July 2016 the Administrative Appeals Tribunal (the Tribunal) affirmed the decision of the Commission for Taxation in Re Azer and FCT [2016] AATA 472 which found that an individual taxpayer could not make out special circumstances in order to have excess concessional contributions ignored. Mr Azer worked in a number of casual jobs in addition to his full time Victorian Public Service role. He salary sacrificed all his earnings from his casual jobs into his superannuation account to provide for his retirement and his family. In response to receiving a notice of amended assessment for the 2013-14 financial year, Mr Azer submitted that he had made an inadvertent mistake and he would have stopped the salary sacrifice arrangement had he known he was approaching his concessional contributions cap. The Tribunal concluded that Mr Azer's motives were admirable however inadvertent mistakes are not special circumstances.
  • On 15 July 2016, the Federal Court of Australia handed down judgement in the case Campbell v Superannuation Complaints Tribunal [2016] FCA 808, an appeal from a determination of the Superannuation Complaints Tribunal. The applicant, a member of the Military Superannuation Benefit Scheme was discharged from the Australian Defence Force on medical grounds and became entitled to an invalidity benefit from the Scheme.

    On 18 July 2014, the applicant applied to the trustee of the Scheme, the Commonwealth Superannuation Corporation, for information about his superannuation interests in the Scheme for the purpose of a superannuation valuation under the relevant provisions of the Family Law Act 1975 (Cth) and Family Law (Superannuation) Regulations 2001 (Cth) dealing with the 'splitting' superannuation interests in matrimonial causes. The Trustee's response characterised the applicant's invalidity pension as part of his 'superannuation interest' in the Scheme. However, the applicant complained (first to the Trustee and then to the Tribunal) that his invalidity pension benefit was not a 'superannuation interest' for the purposes of the relevant provisions of the Family Law Act and Regulations on the basis that superannuation was a benefit paid in respect of age retirement, whereas his invalidity pension benefit was paid by virtue of a medical condition.

    The Court considered the definitions of 'superannuation interest' and 'defined benefit interest' in the Family Law Act and Regulations respectively, and ultimately held that, contrary to the approach taken by the Trustee and the Tribunal, the applicant's invalidity benefit should not have been valued as a 'defined benefit interest' as defined in the Family Law Regulations. However, the Court held that the invalidity benefit was still a 'superannuation interest' for the purposes of the relevant provisions of the Family Law Act, and should have been valued for Family Law purposes as an 'accumulation interest'. The matter was therefore remitted back to the Tribunal for reconsideration.
  • On 20 July 2016, the Australian Tax Office updated its website to note that legislation is currently being developed to implement the 2016-17 Federal Budget announcements regarding the introduction of a lifetime cap of $500,000 on non-concessional superannuation contributions. The cap will take into account all non-concessional contributions made on or after 1 July 2007. The lifetime cap will be indexed to the Average Weekly Ordinary Time Earnings increasing in $50,000 increments.
  • On 2 August 2016, the Productivity Commission released its draft report entitled "How to Assess the Competitiveness and Efficiency of the Superannuation System". In this draft report, the Commission has proposed criteria to "assess whether, and the extent to which, the superannuation system is efficient and competitive in delivering the best outcomes for members." In addition, the draft report sets out the Commission's proposed assessment approach which involves the following three steps:
    • defining system-level objectives — what is the superannuation system trying to achieve?;
    • formulating assessment criteria based on these objectives — that is, the performance standards by which to assess if the system-level objectives have been achieved; and
    • identifying indicators and other evidence to facilitate the assessment.

The Commission has invited written submissions in response to its draft report by 9 September 2016. The final report is expected to be handed to the Australian Government in November 2016 and published by the Commission a short time later.