The Administrative Appeals Tribunal’s (Tribunal) Deputy President has affirmed the Commissioner of Taxation’s (Commissioner) decision to amend a Taxpayer’s superannuation guarantee assessments.
In April 2013 the Commissioner notified the Taxpayer that he proposed to undertake an audit of the Taxpayer’s employer obligations in respect of the period 1 July 2010 to 31 December 2012 (Period).
The Commissioner found that the Taxpayer had a superannuation guarantee shortfall for 6 of the Period’s quarters (due to late payments subsequently made throughout the Period). The Taxpayer also lodged late superannuation guarantee statements, on 10 June 2013, in respect of those periods (rather than on the 28th day of the second month after the end of the period).
Late lodgement of the statements also meant that superannuation guarantee charge became payable on that date, under section 46 of the Superannuation Guarantee (Assessment) Act 1992 (SG Act), as well as the 10% nominal interest component under section 31 of the SG Act.
The Taxpayer objected against the assessments, but the objections were disallowed. The Taxpayer sought the Tribunal’s review of the Commissioner’s decision on the basis that it considered the calculation of the nominal interest component to be unfair because it was calculated by reference to the date of lodgement of a form – which was many years removed from the date of contribution.
The Taxpayer submitted that the imposition of nominal interest component in this case was “unfair, inequitable and unreasonable” and it urged the Commissioner (and Tribunal) to apply section 37 of the SG Act to amend the nominal interest component to a lesser amount.
Section 37 states that the Commissioner “may, subject to this section, at any time amend any assessment by making any alterations or additions that the Commissioner thinks necessary, whether or not superannuation guarantee charge has been paid in relation to the assessment”. The Taxpayer’s submission was that the Commissioner can make any alterations that he thinks necessary and therefore he should make an alteration that would remove, or at least reduce, the nominal interest component.
The Tribunal took the view that it appears to be a deliberate design feature of the legislation that, once a contribution is made late, then whether it is made a day late or several years late will have no bearing on the calculation of the nominal interest component. What becomes important is not the date of contribution, but the date of lodgement of the statement with the Commissioner. Therefore, the question is whether, having regard to the clear and unambiguous terms of section 31, and the consequence that the nominal interest component has been correctly calculated by the Commissioner, section 37 authorises an amendment to the assessments to remove or reduce that interest component. In the Deputy President’s view, it does not.
Instead, section 37 authorises the Commissioner to amend an assessment by making any alterations or additions that the Commissioner thinks necessary. An alteration to an assessment would be necessary if, but only if, it brought an assessment into alignment with the Commissioner’s understanding of the facts and the law. For example, if the Commissioner had made an assessment on an initial understanding that an employee’s wages were $12,000 when in fact they were $10,000, or an original assessment had incorrectly used a “charge percentage” of 10 when it should have been 9, the Commissioner would be empowered, and indeed obliged, to amend the assessment so that it reflected the true position.
However, as the Deputy President stated, the Commissioner cannot pretend that a statement was made in 2011 when in fact it was made in 2013. The Commissioner is not empowered to make assessments which, while perhaps consistent with some undefined notion of fairness, are nevertheless contrary to the law.