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Do special circumstances exist to warrant an exercise of the Commissioner's discretion under section 140ZB of the Income Tax Assessment Act 1936 (ITAA 1936)?

Yes, special circumstances do exist to warrant an exercise of the Commissioner's discretion under section 140ZB of the ITAA 1936.

The recipient received a number of superannuation benefits.

Several years after receiving these benefits the recipient withdrew a number of eligible termination payments (ETPs) over a period of one year.

The benefits were reported to the ATO within six months of payment.

The recipient did not receive RBL determinations in respect of these ETPs until a number of years after they were paid. When determinations were issued, the recipient was determined as having an excessive amount on all of the ETPs.

The recipient states that had an RBL determination been received in respect of the first of these ETPs showing that the recipient was in excess of the RBL no further ETPs would have been withdrawn.

Section 140ZB of ITAA 1936 allows the Commissioner to treat an excess benefit as being within a recipient's RBL because of special circumstances.

The term 'special circumstances' is not defined in legislation. However, it has been considered in several cases dealing with the exercise of a variety of discretions.

In the case Tefonu Pty Ltd v Insurance & Superannuation Commissioner (1993) 44 FCR 361, the Administrative Appeals Tribunal (AAT) found that the term meant circumstances that are unusual, uncommon, exceptional and abnormal.

In AAT Case 64/96 , the AAT considered that special circumstances recognised that a strict application of legislation may "result in an unjust, unreasonable or inappropriate result".

Section 140R of the ITAA 1936 provides that the Commissioner must issue a RBL Determination within 60 days of benefits being reported if the benefit has been determined in excess of the recipient's RBL.

In this case the Commissioner has not met his obligation in making a determination within the required 60 days of receiving the notice.

The Commissioner has exercised his discretion to treat all of the excess benefits, other than the first ETP determined with an excessive amount, as within the recipient's RBL.