Division 293 tax is being introduced from the 2012-2013 year to reduce the tax concession on superannuation contributions for individuals with income greater than $300,000 a year.
Division 293 tax will be charged at 15% of an individual’s taxable concessional contributions above the $300,000 threshold (which are capped for 2012-13 at $25,000). For individuals who are members of a defined benefit fund, Division 293 tax may be calculated on notional contributions which are not capped.
Are you liable to pay Division 293 tax?
You are liable to pay Division 293 tax if you have taxable contributions for an income tax year. If your income for surcharge purposes, plus your low-tax contributions, are greater than $300,000, the taxable contributions will be the lesser of the low-tax contributions and the amount above the $300,000 threshold.
Assessing your Division 293 tax debt
The ATO uses the following information to assess whether you’re liable to pay Division 293 tax:
•Income tax return to determine income for surcharge purposes
•MCS and SMSF annual returns to determine low-tax contributions.
Assessments for Division 293 tax will generally not be issued until both pieces of information have been received. In the first financial year (2012-2013), assessments will not be issued until January 2014, when our systems will be switched on.
The threshold at which a Division 293 tax calculation will result in an assessment being issued is $300,000.
There are two types of original Division 293 tax assessments that will be issued:
•Due and payable liability