Contribution cap 'mistakes' not always cause for refund: MLC

With the Australian Taxation Office expecting to commence issuing the first excess contribution tax assessments for the 2007-08 year next month, MLC has warned financial advisers that many genuine mistakes including miscalculation will not be cause for a refund.

An MLC statement suggests that the concept of ‘genuine mistake’ needs to be further clarified and may need to be tested further in legal jurisdictions.

While in some cases a refund may be issued where a ‘genuine mistake’ has occurred, this would not generally cover situations where a client or their adviser was unaware of the contribution caps, miscalculated the amount of contributions or were not aware of the potential consequences of making larger contributions, MLC said.

However, MLC advised that there were still limited circumstances where a client exceeds one or both caps that the contributions could be refunded, including if a client was between 65 and 75 and didn’t meet the work test, the client made personal contributions without a valid tax file number or a single personal contribution was received that exceeded the non-concessional contribution cap.