What is Div 293 tax?
Div 293 tax is an additional tax of 15% on concessional super contributions if you earn over $250,000.
How does it work?
If your income and concessional contributions (CCs) exceed $250,000, you may have to pay an additional 15% tax on some or all of your CCs, as the case study below illustrates. Income from a range of sources counts towards this limit, including employment and business income, investment income, and income you may receive from one-off payments such as redundancy and termination payments.
Div 293 tax is payable in addition to the standard 15% tax that is generally paid on CCs by most people. For many people concessional contributions are still worthwhile. Even though you’ll pay tax on all or part of your concessional contributions (within your cap) at 30%, this is still less than the top marginal tax rate of 47% (including Medicare levy) that generally applies to high income earners who are liable for Div 293 tax.
How do I know if I have to pay Div 293 tax and what do I need to do?
The ATO will work out if you need to pay Div 293 tax based on information in your tax return and data they receive from your super fund(s). They will issue you with a notice of assessment stating the amount of tax payable and provide an authority to enable your super fund to release the money. You can, however, pay the tax from your non-super savings.
Note: Different rules apply for calculating Div 293 tax if you are a member of a defined benefit fund – see the Australian Taxation Office for more information.
May be payable if…
Your income from certain sources and CCs exceed $250,000.
Case study
Bob earns a salary of $200,000 and his employer contributes $24,000 into super for him. He earns no other sources of income. His total income for Division 293 purposes is $224,000, which is within the limit of $250,000. Bob is not subject to Division 293 tax. His entire CCs would therefore be taxed at 15%.
Bob’s wife Mary earns a salary of $250,000 and her employer contributions for the year total $30,000. Mary’s total income for Division 293 purposes exceeds $250,000 and all her concessional contributions exceed the income threshold of $250,000. All the $30,000 contributions will be subject to 15% contributions tax and an additional 15% Division 293 tax.. She can choose to pay the Division 293 tax liability personally, or she can choose to release this amount from her super fund to pay the Division 293 tax liability.
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General advice and information only
Any advice and information on this website is general only, and has been prepared without taking into account your particular circumstances and needs. Before acting on any advice on this website you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives.
Tax disclaimer
Any general tax information on this website is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.
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