The facts of the case stated that the taxpayer joined his defined benefit Commonwealth superannuation fund in January 1980, is now aged over 60 and was over 55 in the 2022 financial year.

The tribunal heard that the taxpayer understood from the time of starting his employment with the Commonwealth Public Service that he was required to contribute 5 per cent of his gross salary annually, which he did, although the tribunal noted he could have opted not to contribute.

As a member of a defined benefit fund, the taxpayer could not claim tax deductions for his contributions and the contributions he made are now known as non-concessional contributions for which his cap was nil for the relevant financial year.

The taxpayer had with his Commonwealth super: (a) accumulated basic contributions of $457,657.09; (b) accumulated employer contributions of $155,085.11; (c) accumulated supplementary contributions of $240.10; and (d) transfer amounts of $0.

The tribunal heard that the taxpayer was surprised when he was notified by the ATO that his total superannuation balance was calculated at over $1.7 million after his fund had informed him that he had a total benefit amount of $612,982.30 (as of 1 July 2021) and $606,368.91 (as of 30 June 2022).

The taxpayer challenged this calculation, which was disallowed by the ATO at first instance and he paid tax of $2,906.85. He objected and the ATO issued an amended (second) determination with a refund of $107.85.

The facts continued that the taxpayer contended to the tribunal that his TSB was miscalculated and would depend on variables that were unknown as of 30 June 2021, including his age at retirement, years of service and final salary.

The tribunal re-made the calculation under section 307.205(2)(b) of the ITAA 1997 as the total amount of the superannuation benefits that would become payable if the individual voluntarily caused the interest to cease at that time.

In its decision, the tribunal noted that under section 62(2B) of the Superannuation Act 1976 (which governed the taxpayer’s Commonwealth-defined benefit superannuation) an employee aged 55 or over when ceasing as an employee could elect in lieu of a pension to receive a lump sum equal to 3.5 times their accumulated basic contributions. Therefore, 3.5 x was the applicable multiplier.

The tribunal re-calculated the taxpayer’s TSB at the relevant time using two different methods to come to the same amount:

(3.5 x 457,657.09) + 240.1041 = (1,601,799.82) + 240.10 = $1,602,039.92 (his accumulated basic contributions)

Then adding his employer contributions to his accumulated basic contributions:

$1,602,039.92 + $155,085.11 = $1,757.125.03

The calculations placed him in excess of a $1.7 million TSB cap and his non-concessional contributions tax in that financial year was therefore upheld.

The taxpayer also failed in his claim for interest on the $107.85 refund and failed in his challenge against the validity of the second ATO determination.