Have you recently received a Division 293 Notice from the ATO?
You may have received one of these notices recently. Sounds technical but what is it?
It’s basically a money grab from the Australian Government.
Where an individual earns more than $250,000 in a year then they are charged an additional 15% tax on their concessional (read as pretax) super contributions. Concessional contributions include contributions by your employer, member contributions where you claim a tax deduction and salary sacrifice.
Concessional contributions are already taxed at 15% so the additional 15% brings the total tax to 30% on super contribution.
Is it worth it?
If you’re subject to this tax then you’re probably paying 47.0% tax so there is still a saving of 17.0%. Still worth it but less exciting (well for an accountant)..
How to Pay?
You can pay the bill using your own funds or the super funds. If you want to use your super to pay the bill then you need to complete the release authority which should be attached to your notice of assessment.
Pro Tips
Income for Div 293 purposes is not just taxable income. The ATO make adjustments such as adding back rental losses and including fringe benefits (amongst other things).
Using a trust?
Potentially you could stream your income to certain family members to avoid the additional tax.
State higher level office holder or Commonwealth Judge?
You’re in luck, there are some exemptions for yourselves.
Here’s a link to some further information from the ATO.
Author: Brigette Liddelow
Email: brigette@faj.com.au
