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Division 293 Tax for SMSFs

Division 293 tax is an additional tax that applies to high-income earners making concessional superannuation contributions.

 

It’s designed to make the tax treatment of super contributions fairer by reducing tax concessions for individuals with higher incomes.


At HelloLedger, we help SMSF trustees understand Division 293 tax, calculate liabilities, and ensure compliance with ATO requirements.

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What Is Division 293 Tax?

Division 293 tax is a 15% tax applied to concessional contributions for individuals whose adjusted income exceeds $250,000 per year.
 

  • It applies in addition to the 15% tax already charged on concessional contributions within the SMSF.

  • This effectively results in a 30% tax rate on concessional contributions for affected individuals.

Who Does Division 293 Tax Apply To?

You may be subject to Division 293 tax if:

  • Your adjusted income (including taxable income, reportable fringe benefits, and investment losses) exceeds $250,000 in a financial year.

  • The sum of your adjusted income and concessional contributions pushes you over the $250,000 threshold.

Example:

  • Taxable income = $240,000

  • Concessional contributions = $20,000

  • Total = $260,000 (above the $250,000 threshold).

  • Division 293 tax applies to the $10,000 amount above the threshold.

How Is Division 293 Tax Calculated?

  1. The ATO assesses your total income, including:
    - Taxable income.
    - Reportable employer super contributions.
    - Reportable fringe benefits.
    - Net investment losses.
     

  2. If your adjusted income exceeds $250,000, a 15% tax is applied to the lesser of:
    - The amount above the $250,000 threshold.
    - Your concessional contributions for the year.

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Paying Division 293 Tax

Payment Options:

  1. Pay the Tax Personally: You can pay the tax directly to the ATO.

  2. Release Funds from Your SMSF: You can elect to release the tax amount from your SMSF account using an ATO Division 293 election form.

 

At HelloLedger, we assist with the documentation and lodgement process, ensuring payments are made on time and accurately recorded.

Impact of Division 293 Tax on SMSFs

  1. Contribution Tracking
    Since concessional contributions are taxed at 15% inside the SMSF and may incur an additional 15% Division 293 tax, it’s important to monitor contributions closely to avoid further penalties.
     

  2. Excess Contributions
    Division 293 tax can also apply to excess concessional contributions (ECCs), which may result in further tax implications if not managed properly.
     

HelloLedger provides tracking and reporting tools to ensure your contributions remain compliant.

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Division 293 Tax FAQs

  • What is Division 293 tax?

  • Division 293 tax is an additional 15% tax applied to concessional super contributions for individuals with adjusted incomes over $250,000 per year.

  • What income is included in the Division 293 tax calculation?

     

  • The adjusted income calculation includes taxable income, reportable fringe benefits, investment losses and concessional contributions.

Does Division 293 tax apply to non-concessional contributions?

No, Division 293 tax only applies to concessional contributions (before-tax contributions). Non-concessional contributions are after-tax and do not attract Division 293 tax.

  • How is Division 293 tax calculated?

  • It’s calculated as 15% of concessional contributions made to your SMSF, applied to the lesser of the amount exceeding the $250,000 threshold and the total concessional contributions for the year.

  • .

Can I pay Division 293 tax from my SMSF?

Yes, you can elect to pay Division 293 tax from your SMSF balance by submitting a Division 293 election form to the ATO. HelloLedger can assist with the lodgement process.

  • What happens if I don’t pay my Division 293 tax?

  •  

  • Failure to pay Division 293 tax on time can result in interest charges and further penalties imposed by the ATO.

Get in Touch

Ready to take control of your retirement savings with a Self Managed Super Fund? 

Contact HelloLedger today for expert SMSF services. Together, we’ll pave the way for a secure and prosperous retirement. Say Hello to strategic superannuation management and Goodbye to worry!

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