Division 293 Tax

What is the Division 293 tax?

Division 293 tax is a tax on high-income earners’ concessional superannuation contributions. This tax is designed to ensure that high-income individuals pay a fairer share of tax on their super contributions, aligning with the broader goal of maintaining equity in the superannuation system.

Who is Affected by Division 293 Tax?

Division 293 tax applies to individuals with an income exceeding $250,000 per year. This income threshold includes both taxable income and concessional superannuation contributions, such as employer contributions and salary sacrifice contributions. If your total income, including these contributions, surpasses the $250,000 mark, you may be subject to an additional 15% tax on your concessional contributions.

How is Division 293 Tax Calculated?

The Division 293 tax is calculated on the amount of concessional contributions that exceed the $250,000 income threshold. The additional 15% tax is applied to these excess concessional contributions. For example, if your total income is $270,000 and you have $30,000 in concessional contributions, the Division 293 tax will apply to the $20,000 (the amount by which your total income exceeds the $250,000 threshold).

How Should Division 293 Tax Be Paid?

You can pay a Division 293 tax bill using your personal funds, SMSF (Self-Managed Super Fund), or your retail or industry super fund. If you choose to pay from your SMSF managed by iCare Super, please notify us. We will process the payment request and provide you with the BPAY details needed to make the payment to the ATO. Alternatively, you can manage the payment via MyGov.

How to Manage Division 293 Tax

To manage your Division 293 tax liabilities, consider the following strategies:

1. Review Your Income and Contributions: Regularly review your income and superannuation contributions to ensure you stay below the Division 293 threshold. Adjusting your salary sacrifice contributions or other concessional contributions can help avoid exceeding the $250,000 limit.
2. Consult a Tax Professional: Seek advice from a tax professional or financial advisor to understand your potential Division 293 tax liability and explore strategies to minimize it. They can help you plan your contributions and manage your income to reduce your tax burden.
3. Utilize Non-Concessional Contributions: If you are approaching the income threshold, consider making non-concessional contributions to your superannuation fund. These contributions are made from after-tax income and do not attract Division 293 tax.
4. Keep Updated with Tax Legislation: Stay informed about any changes to tax legislation that may impact your superannuation contributions and Division 293 tax. Tax laws can change, and it’s essential to stay up-to-date with the latest information.

Contact Us

If you need help understanding Division 293 tax or managing your superannuation contributions, contact us today. Our experts can provide guidance and strategies to optimize your superannuation planning and minimize your tax liabilities. Let us help you navigate the complexities of Division 293 tax and ensure your superannuation strategy aligns with your financial goals.