On 27.11.18, the ATO advised that it will begin issuing superannuation Division 293 tax assessments in December 2018.

The ATO said it has redesigned the notice of assessment for Division 293 tax to include further details to explain:

  • what Div 293 tax is,
  • why the additional tax applies,
  • how much additional tax needs to be paid and
  • what taxpayers need to do next.

‘Excess concessional contribution’ notices are being similarly made in December (see related Tax Technical Article).

Division 293 tax was introduced from the 2012–13 year to reduce the tax concession on superannuation contributions for individuals with income greater than the Division 293 threshold. It does this by imposing an additional  15% tax on an individual’s ‘ low tax contributions’.

  • The Division 293 (income) threshold was $300,000 (when the tax started), but it has been reduced to $250,000, from 1 July 2017 onwards.
  • The amounts included in this $250,000 amount are: taxable income; total reportable fringe benefits amounts (benefits taxed to employer and not to the individual); net financial investment loss (which reduce the underlying remuneration); net rental property loss (for the same reason); net amount on which family trust distribution tax has been paid; and super lump sum taxed elements with a zero tax rate. Additional ‘assessable income’ from ‘excess concessional contributions’ is excluded (because the ATO says that would be ‘unfair’).
  • Broadly, “low tax contributions” are concessional contributions that include all employer contributions, such as superannuation guarantee and salary sacrifice contributions, and personal contributions for which a deduction has been claimed.

FJM 7.12.18

[ATO website: Div 293 Assessments Issue; LTN 229, 27/11/18; Tax Month – November 2018]

CPD questions (answers available)

  1. In what month are the Div 293 assessments, for the year to 30 June 2018, issuing?
  2. Are the Notices redesigned?
  3. How does Div 293 compensate for persons with higher income getting greater value out of the tax deductions for contributions?
  4. What is the new ‘Div 293 (high income) threshold’, starting in the 2017/18 year?

 

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