Division 293 – A Surprising Tax Cost

Division 293 – A Surprising Tax Cost

Div 293 Tax – A Surprise Tax for High Income Earners

It is generally understood that Australian taxpayers pay Income Tax based on their Taxable Income. What is less understood are the many additional taxes that high income earners pay. One of those additional charges is Division 293 Tax, an additional 15% tax on excess superannuation contributions for people earning above a prescribed income. Currently (Reduced from $300,000 from 1 July 2017) the Div 293 Income Threshold is $250,000.

Information for Those Earning Over $200,000

We are not fans of clients receiving surprise bills, especially when they come from the ATO so want to provide you with a heads up about this nasty little surprise tax.

The ATO calculate this after we have lodged your tax return. The calculation includes information from your tax return plus information they receive from your super fund. Because we don’t have access to the information your super fund provides to the ATO we cannot accurately estimate your Div 293 liability when we lodge your tax return. Complicating things further, are special rules for certain types of fund and people.

In general, the following will apply to most taxpayers:

If your Taxable Income approaches or exceeds the Income Threshold (currently $250,000) it is possible you will receive a Div 293 assessment after lodging your tax return. If you have more than one fund and it reports contributions for you after you have lodged your income tax return, you may also receive an amended Division 293 tax assessment.

A Simple Example:

  • Kenny reports Taxable Income of $245,000.
  • Kenny’s super fund reports Division 293 super contributions of $10,000.
  • Kenny’s Div 293 income is therefore $255,000.
  • Kenny is charged 15% tax on the $5,000 over the threshold and will receive a Div 293 assessment for $750.


Payment of Div 293 Tax

Your specific payment options will be detailed on your Notice of Assessment. Currently, there are two ways to pay your Div 293 liability:

With your own money as you would pay any other tax liability; or
By electing to pay the debt out of your super fund.

More Information

The information contained in this Fact Sheet is general information only and as such should not be relied upon. For professional advice you can rely on give us a call on (07) 5448 9600 or CLICK HERE to book an appointment or call back.