Division 293 tax is a tax paid by the SMSF or a Member when the Member earns over $250k in taxable income. There is a list of income types used by the ATO to assess if the $250k cap has been reached.
This was announced in the 2012 Federal Budget as an additional tax on superannuation contributions for higher income earners. From early February 2014, the Tax Office has started issuing Division 293 tax notices of assessment to affected individuals.
The additional tax rate of 15% apply to Members earning over the $250,000 threshold. This extra 15% tax on concessional contributions can then be paid by the SMSF or the Member in an individual capacity.
Who will be liable for Division 293tax?
If your personal taxable income is over $250,000 and you’ve made concessional contributions to super, you will receive a Division 293 tax assessment.
Division 293 Downloadable Forms
Complete the Division 293 Due and Payable election form if you have received a Division 293 notice of assessment with an amount in the ‘Tax payable now’ section, ‘Outcome of this notice field’.
Complete Division 293 Deferred debt account election form if you have received a Division 293 notice of assessment with an amount in the ‘Deferred amount’ field.
For ATO guidance on the working of the Div 293, see the ATO website here.
Initially the Div 293 tax kicked in for earning over $300k, but has now been lowered to $250k. For more information on taxation in SMSF’s see our main Tax page.