A great many tax consequences turn on when a payment is made. A difference of one day can determine the year of a contribution, a deduction or an assessment.
That question will arise more often under Payday Super. Since 1 July 2026, superannuation contributions must generally be received within seven business days after the relevant payday. The legislation now separately names the “receipt day” and the “payment day”: the latter includes the day the contribution was paid or debited from an account. One bank transfer can therefore have more than one legally significant date. SGAA s 33(3)
This session begins a six-week arc on when payment occurs in a bank transfer.
The starting point is Liwszyc v Federal Commissioner of Taxation [2014] FCA 112. On 30 June 2009, two BPAY payments were initiated to an AMP superannuation account. AMP received and applied them on 1 July. The difference was one day, but it contributed to an excess-contributions-tax assessment of $16,905.20.
Between the payer’s instruction and the payee’s use of the funds, there are six possible moments of payment:
- the payer instructs its bank;
- the payer’s bank irrevocably decides to act on that instruction;
- the payer’s account is debited;
- the payee’s bank accepts the payment;
- the payee’s account is credited; and
- the payee has unconditional use of the funds.
Over the following sessions we will test each of those moments against the authorities: Momm v Barclays Bank International Ltd, Tidal Energy Ltd v Bank of Scotland plc, Tayeb v HSBC Bank plc, The Chikuma, and Visa International Service Association v Reserve Bank of Australia. Some cases may answer more than one moment; that is part of the difficulty.
Liwszyc also raises a contractual problem that will run through the arc. Payment-system rules, the customer’s banking contract, the fund’s arrangements and the tax legislation may each identify a different moment as decisive. The question is not simply when money moved, but whose legal relationship is being examined and for what statutory purpose.
Come prepared to discuss the following:
- Whether Liwszyc decided when the contributions were made, or only whether the Commissioner should have exercised the special-circumstances discretion. Compare [27], where the taxpayer did not challenge the Commissioner’s treatment of the payments, with [43], where the Court called the timing question “essential”;
- Whether the distinction between “contribute” and “contribution” at [61]–[62] can bear the weight the judgment places upon it;
- Which of the six moments best describes the BPAY payment on the facts of the case;
- Whether the payment rail—BPAY, BECS or the New Payments Platform—should affect the answer; and
- Whether a contractual obligation to treat a payment as received on the instruction date can affect the tax outcome.
Required Reading:
Liwszyc v Federal Commissioner of Taxation [2014] FCA 112 — [27], [43] and [51] to [69]. Taxation Ruling TR 2010/1 at [182] to [187] is reproduced in the judgment at [58].
Discussion led by Adrian Cartland.