Reduced super concessions under Division 293 tax

A tax may apply to individuals with high incomes to reduce the amount of concession paid on their super contributions. This tax is known as Division 293 tax.

Division 293 tax was introduced to reduce the concession on superannuation contributions for individuals with income greater than $300,000 per annum.

Under Division 293 of the Income Tax Assessment Act 1997 tax will be payable on certain contributions made from 1 July 2012.

If an individual’s income for surcharge purposes, plus their low-tax contributions are greater than $300,000, they may be liable to pay an extra 15 per cent tax on their taxable contributions.

For individuals who are members of a defined benefit fund Division 293 tax may be calculated on notional contributions, which are not capped.

There are also modifications to the contribution calculation for constitutionally protected state higher level office holders or Commonwealth justice.

To calculate whether an individual has income and low-tax contributions greater than $300,000 the ATO will be looking at:

  • income reported on the individual’s income tax return, including:

-taxable income

-total reportable fringe benefit amounts

-net financial investment loss

-net rental property loss

-amounts on which family trust distribution tax has been paid

-super lump sum taxed elements with a zero tax rate.

  • contributions reported in their member contribution statement
  • self managed super fund annual return.

The ATO will begin issuing Division 293 tax notices of assessment for the 2012-13 financial year to affected individuals from early February 2014.

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