What is Division 293?
The Division 293 tax in Australia is a tax rule that targets higher-income earners by applying an additional tax rate on their superannuation contributions. It aims to make the tax treatment of superannuation fairer and ensure that high-income individuals receive the same concessional tax treatment as lower-income earners.
Who Does It Apply To?
The Division 293 tax is applicable to individuals whose combined income (including taxable income and concessional superannuation contributions) exceeds a certain threshold.
For the 2022-2023 financial year, the threshold is set at $250,000.
To calculate the Division 293 tax, you need to determine the excess amount above the threshold and apply a 15% tax rate to that excess.
ATO assess you for Division 293 once you have lodged your Individual Tax Return AND your superfund(s) have lodged their returns confirming your contributions.
How to Pay?
Division 293 Assessments are issued to you as an individual. As Div293 imposes an extra 15% tax on some or all of your super contributions for a given year.
There are 2 ways to pay:
– from your own money; or
– by releasing money from your super
We recommend releasing money from super as the funds being taxed are sitting in super.
EXAMPLE
Let’s take the example of someone earning $240,000 with $19,000 in super contributions in the same year.
Step 1: Calculate the combined income
Combined income = Taxable income + Concessional superannuation contributions
In this example, the taxable income is $240,000 and the concessional superannuation contributions are $19,000.
Combined income = $240,000 + $19,000 = $259,000
Step 2: Determine the excess amount above the threshold
Excess amount = Combined income – Threshold
In this example, the threshold is $250,000.
Excess amount = $259,000 – $250,000 = $9,000
Step 3: Calculate the Division 293 tax
Division 293 tax = Excess amount × 15%
Division 293 tax = $9,000 × 0.15 = $1,350
So, in this scenario, an individual earning $240,000 with $19,000 in super contributions would be liable for a Division 293 tax of $1,350.
Division 293 assessments are issued to the individual in a similar way to a regular Notice of Assessment. The assessment will come via myGov or via mail. You need to deal with this straight away.
We recommend following the instructions to have money released from super to pay the assessment before the due date.
DISCLAIMER: It’s important to note that this is a simplified example and actual tax calculations may involve other factors and deductions. It’s advisable to consult with a qualified tax professional or the Australian Taxation Office (ATO) for accurate and personalized tax advice.
