Superannuation Tax

What is Superannuation Division 293 tax?

Division 293 tax is being introduced from the 2012-13 year to reduce the tax concession on superannuation contributions for individuals with income greater than $300,000 a year.

Division 293 tax will be charged at 15% of an individual’s taxable concessional contributions above the $300,000 threshold.

Who is liable to pay Division 293 tax?

Individuals will be liable for Division 293 tax if they have taxable contributions for an income year and their income for surcharge purposes plus their low-tax contributions are greater than $300,000. The taxable contributions will be the lesser of the low-tax contributions and the amount above the $300,000.

How is Division 293 tax calculated?

ATO will calculate the Division 293 tax as per below:

1. Determine your income – This is similar to the calculation of income for Medicare levy surcharge purposes and is collected from your income tax return.
2. Determine your low-tax contributions.
3. Add together your income from Step 1 and your low tax contributions from Step 2.
4. If the combined figure us greater than $300,000, you have taxable contributions. These are the lesser of:
   • The low tax contributions; or
   • The amount above $300,000
5. Apply a 15% tax rate to the taxable contributions.

For example, if your income for the year is $290,000 and you have made low-tax contribution of $20,000. ATO will calculate that your total combined is above the $300,000 threshold by $10,000. Therefore, your taxable contribution for the purpose of Division 293 tax is $10,000.

How do you pay the Division 293 tax?

Individuals are responsible for paying their Division 293 tax. However, they can either seek reimbursement from their super fund or ask their super fund to pay the tax by using a release authority form. ATO will send you a Release Authority in conjunction with any Division 293 tax assessment they issue.

If you have any questions on this superannuation tax or SMSF matters, please call Superhelp on 1300 736 453.

Article Disclaimer: This information should not be considered personal financial advice as it is intended to provide general advice only. The article has been prepared by Superhelp Australia Pty Ltd without taking into account your personal objectives, financial situations or needs. 

The information contained in the article may not be appropriate to your individual needs therefore you should seek personal financial advice before making any financial or investment decisions.