ECT: a glimmer of hope for taxpayers

The Americans use the expression "Batting 1000" to describe someone who has a perfect strike rate.

Before last Friday, the ATO was Batting 1000 on appeals against disallowed Excess Contributions Tax objections.  Then along came Benjamin Bornstein.

In what seem to be unremarkable circumstances, the AAT has allowed Mr Bornstein's appeal against the ATO objection decision, and decided that contributions made to a superannuation fund on 10 July 2007 should be attributable to the 2006/07 financial year.

Mr Bornstein made a contribution to his fund on 10 July 2007 after returning from overseas 2 days earlier, believing that the contribution would count for the previous financial year.  He reached this belief after contacting his accountant, and reviewing material on the ATO website prior to departing for an overseas trip on 21 June. 

The AAT was satisfied that special circumstances existed on the basis that:

• Mr Bornstein took advice from his accountant - this demonstrated he was conscious he had obligations and that he was attempting to comply with them;
• Mr Bornstein visited the ATO website before making the contribution.  The website described the employer obligations but not the employee's obligations.  This ambiguity gave rise to confusion;
• Mr Bornstein argued that he was denied the opportunity to fix the error because the ATO did not alert him to the true position before further contributions were made in the 2007/08 year.

The AAT concluded that these matters together created "what might be described as a "perfect storm" of events, miscommunications and misunderstandings that combined to leave the taxpayer in an unusual and unfortunate position", and that special circumstances were made out, even though any fault attached to the taxpayer or his agent.

It will be interesting to see whether this case is followed in the future.