Division 293 Tax Election
Did you get caught by Div293 tax? What does it really mean?
Did you get caught by Div293 tax? What does it really mean?
Division 293 tax is an additional tax on super contributions, which reduces the tax concession for individuals whose combined income and contributions are greater than the Division 293 threshold.
The maximum extra tax you will pay is 15%.
From 1 July 2017, the Division 293 threshold is $250,000. Prior to this, it was $300,000.
What is included in the Div 293 income?
Note that Div 293 income is not the same as your taxable income
It includes the following:
Essentially, there are no strategies that can be used to reduce an individual’s liability for Division 293 tax. Also, you need to keep in mind that you are still better off – 15% tax is better than 45%
You have couple of options when you receive the assessment. You can choose to pay the tax from yourpersonal resources. Alternatively, you can elect to have the amount released from their super fund to pay the tax.
Note that you must do this one time though. The time frame for making the election is 60 days.
For this, you must complete an authority to release form. If you have an SMSF, once the form is done, you are able to pay this additional tax from your SMSF rather than from your personal funds.
Division 293 tax is an additional tax on super contributions, which reduces the tax concession for individuals whose combined income and contributions are greater than the Division 293 threshold.
The maximum extra tax you will pay is 15%.
From 1 July 2017, the Division 293 threshold is $250,000. Prior to this, it was $300,000.
What is included in the Div 293 income?
Note that Div 293 income is not the same as your taxable income
It includes the following:
Even though you may not normally have an income in excess of the Division 293 threshold, certain events can increase your income to this level for a particular year.
For this reason Division 293 might apply to you for only one year where:
In these cases your marginal tax rate for the year increases and therefore the concession you have received on your concessional contributions also increases. To reduce this concession to an equitable level, you may be assessed for Division 293 tax. In the same way your contributions may also increase for a particular year.
If your Division 293 income plus your Division 293 super contributions exceed the Division 293 threshold, you are taxed at 15% on either your contributions, or the amount that is over the threshold – whichever amount is lower.
We calculate your Division 293 tax amount by:
The tax applied will be 15% of the taxable contributions.
