Division 293 tax is an additional tax imposed on high-income earners in Australia to reduce the tax concession they receive on superannuation contributions. It applies to individuals whose adjusted income exceeds a specific threshold.
Who Does Div 293 Apply To?
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Individuals whose adjusted taxable income + concessional super contributions exceeds $250,000 per year.
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If the adjusted income is above the threshold, an additional 15% tax is applied to concessional super contributions (on top of the standard 15% contributions tax).
How Is It Calculated?
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Determine Adjusted Taxable Income:
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Includes taxable income, reportable fringe benefits, net investment losses, and concessional super contributions.
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Check if It Exceeds $250,000:
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If the adjusted income is below $250,000 → No Div 293 tax.
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If it is above $250,000 → Div 293 tax applies to concessional super contributions.
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Apply the 15% Additional Tax:
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The lesser of the amount exceeding $250,000 or concessional contributions is taxed at 15%.
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Example Calculation:
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A person earns $240,000 and has $20,000 in concessional super contributions.
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Their adjusted income is $260,000 (above the $250,000 threshold).
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The excess over the threshold is $10,000, so 15% tax applies to this portion.
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Div 293 tax = $1,500 (15% of $10,000).
How Is It Paid?
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The ATO issues a Div 293 tax assessment.
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The individual can pay it directly or elect to release funds from their super.
Further information can be obtained from ATO website