The taxpayers, fearful that the value of their superannuation funds (which were mostly based on shares) would diminish as a result of the global financial crisis, withdrew their funds and placed them into bank term deposits in early 2008. In July 2008, one of the taxpayers, acting on advice from a major bank, placed $450,000 into one of the bank’s superannuation products. As the taxpayer was under the age of 65, and the amounts deposited were non-concessional contributions, the bring forward rule was triggered for the 2009 income year. Under the bring forward rule, payments may be made above the normal cap, up to $450,000, but the effect of such a payment is that no non-concessional contributions can be made in the subsequent 2 financial years without triggering penalty tax provisions.
Due to a mistaken belief in the nature of the bank product they had invested in, and the falling income from the account, the taxpayer withdrew funds from that account and returned them to term deposit investments. Acting on financial advice from a different adviser in the 2010 income year, the taxpayer and his spouse established a self-managed superannuation fund and the taxpayer made a non-concessional contribution of the $450,000 into this fund. The ATO then issued an excess contributions tax Notice of Assessment, due to the previous use of the bring forward rule.
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