I found these 2 examples of people inadvertently breaching the cap – tough medicine!

A sole trader who made a contribution that consisted of both Concessional and Non-concessional contributions. It was subsequently determined that the sole trader did not have adequate Taxable Income to claim the Concessional contribution as a tax deduction and varied the amount claimed, thus creating an excess Non-concessional contribution.

The ATO commented that:

o discretion is taken on a case by case basis and can only be taken when an assessment of Excess Contribution’s Tax (ECT) is made;
o ECT is a tax and not a penalty;
o If discretion is not exercised a person dissatisfied with the decision may request a review.

A person gave their financial planner some cheques in June for the purpose of making superannuation contributions. The intention was to deposit some these cheques immediately and others in the new financial year. The financial planner accidently presented all the cheques in June. This led to an excess Non-concessional Contribution.

During the discussion in the meeting it was agreed that there was no suggestion that the error was caused by ignorance of the law, poor advice, or a misunderstanding of the tax consequences. There was, however, a clear intention to bank the relevant cheque in July, thus the mistake being a cheque being banked incorrectly.

In this example the ATO declined to exercise its discretion. The ATO provided further explanation saying that they have no firm view on mistake and restitution in the context of superannuation contributions. Further, the ATO is currently considering the effect of clauses within superannuation fund trust deeds that may allow the return of contributions.