The ATO has announced that it will begin issuing notice of assessments for Division 293 tax for the 2012-13 year in early February 2014. The due date for payment of this tax will generally be 21 days after the issue date of the notice of assessment.
What is Division 293 tax?
The Division 293 tax was announced as part of the 2012 federal budget as an additional tax on superannuation contributions for higher income earners. The additional tax is levied on higher income earners to reduce the tax concession these taxpayers receive on making superannuation contributions. These measures have been introduced to align the superannuation tax concessions with taxpayers on lower tax brackets.
Who pays Division 293 tax?
The additional tax is levied on those taxpayers whose income for surcharge purposes and concessional superannuation contributions (up to the cap of $25,000) is greater than $300,000 for the 2012-13 year.
In this instance the income for surcharge purposes is calculated as your taxable income plus reportable fringe benefits plus total net investment losses. It does not include reportable superannuation contributions as this is already included in the above calculation. This information is obtained from your tax return and contributions reported by your superannuation fund/s.
How much tax do I pay?
If your income for surcharge purposes (as calculated above) is greater than $300,000 then your Division 293 tax is 15% of your concessional superannuation contributions limited to the concessional superannuation contributions cap of $25,000.
Where your income for surcharge purposes is less than $300,000 but your income for surcharge purposes plus your concessional superannuation contributions is greater than $300,000 than your Division 293 tax is 15% of the excess of your income for surcharge purposes plus concessional superannuation contributions over $300,000.
Can I use my superannuation to pay for this tax?
Yes similar to excess contributions tax you can request a release authority from your superannuation fund to have these amounts paid or these can be paid out of your own pocket.