Division 293 tax on concessional contributions by high-income earners

About Division 293 tax

Division 293 tax is an additional tax on super contributions, reducing the tax concession for individuals whose combined income and concessional contributions for Division 293 purposes is more than $250,000.

Division 293 tax is charged at 15% of the excess over the threshold or the taxable super contributions, whichever is less.

How you will know if you need to pay

If you're liable to pay, we will send you an Additional tax on concessional contributions (Division 293) notice (Division 293 notice) after we receive both your income tax return and contribution information from your super fund.

If you lodge your tax return using myTax, your Division 293 notice will be sent to your myGov inbox. If you want your notice to go to your tax agent instead, ask them to update your communication preferences.

When you are preparing your tax return

If your income information indicates you will be above the Division 293 threshold, we will remind you about Division 293 tax when you prepare your tax return online.

Your Division 293 notice of assessment will only be sent to you once we have also received the contribution information from your super fund.

If you believe your assessment is incorrect

If you have been assessed for Division 293 tax incorrectly, it is usually because of mistakes in your tax return or in the contribution amounts reported by your fund.

Check the income and contribution amounts on your Division 293 notice carefully. If you disagree with either of these amounts, you may need to correct your tax return or discuss your reported contributions with your fund. Changes made to your tax return or your super fund reporting will update your Division 293 tax.

If you still disagree with your assessment you can lodge an objection if either:

• you believe your Division 293 tax has been calculated incorrectly
• Division 293 tax may have been applied to your account in error.

How to pay

You can pay Division 293 tax liabilities either:

• with your own money – see how to pay
• by releasing money from super – see making an election to release money from super.

By paying Division 293 tax by the due date you will avoid paying interest.

How Division 293 tax is calculated

To assess whether you’re liable to pay Division 293 tax, we use:

• your tax return to determine your Division 293 income
• contribution information reported to us by your super fund to determine Division 293 super contributions.

Assessments for Division 293 tax are issued once we have all the required information. But if you have more than one fund and it reports contributions after you have lodged your tax return, you may receive an amended Division 293 tax assessment.

Division 293 tax will apply if you have taxable super contributions in an income year. You will have taxable super contributions if both:

• you have concessional contributions (employer contributions, SG contributions, salary sacrifice contributions, and deductible personal contributions made by the individual) and certain roll-over superannuation benefits, less excess concessional contributions
• your combined Division 293 income and super contributions exceed the threshold of $250,000.

Your Division 293 tax is 15% of the excess over the threshold or the taxable super contributions, whichever is less.

Division 293 income

The income component of the Division 293 tax calculation is based on the same income calculation used to determine the Medicare levy surcharge (MLS), disregarding any reportable superannuation contributions.

The components of this income calculation are:

• taxable income (assessable income minus allowable deductions)
• total reportable fringe benefits amounts
• net financial investment loss
• net rental property loss
• net amount on which family trust distribution tax has been paid
• super lump sum taxed elements with a zero tax rate
• assessable first home super saver released amount.

These amounts are added up (except the super lump sum and assessable first home super saver released amount, which are subtracted) to give the income amount.

One-off events

Even though you may not normally have an income in excess of the Division 293 threshold, certain events can increase your income to this level for a particular year.

For this reason Division 293 might apply to you for only one year where:

• you receive an eligible termination payment
• you make a capital gain
• your income increases for another reason.

Division 293 super contributions

The contributions counted for Division 293 tax purposes are your concessional contributions, disregarding any excess concessional contributions.

Note that if your concessional contributions cap has increased due to the use of carried-forward amounts, all contributions included in your higher cap amount are counted for Division 293 purposes.

Taxable super contributions

Your taxable super contributions amount is not the same as your Division 293 super contributions. Taxable contributions are the lesser of the Division 293 super contributions and the amount in excess of the threshold.

No discretion for contributions for Division 293 purposes

Unlike excess contributions, we don't have discretion to disregard or reallocate contributions for the calculation of Division 293 tax.

If you apply (and we agree) to have your excess concessional contributions disregarded or reallocated to another year, they will retain concessional tax treatment and need to be added back into the Division 293 calculation.

Division 293 for defined benefit members

Funds are required to report defined benefit contributions.

The amount of defined benefit contributions for the purpose of Division 293 is determined by the annual increase in a defined benefit superannuation account based on the benefit individuals are expected to receive when they leave the fund.

If you're a member of a defined benefit super fund, you don't have access to these contributions even if we give authority for amounts to be released. In this case, you will still be assessed for Division 293 tax but we will defer payment of the amount until a benefit is paid from your defined benefit fund.

If you have more than one defined benefit account, all Division 293 tax attributed to those accounts will be deferred.

How you will know if your Division 293 tax debt is deferred

If you're assessed as having a Division 293 tax debt, a notice of assessment will be issued to you. The notice of assessment will identify the deferred amounts, and any amounts due and payable within a specified timeframe.

If you have multiple defined benefit accounts, the Division 293 tax is apportioned between them and deferred separately.

Division 293 tax deferred to a debt account

We establish a debt account for deferred Division 293 tax amounts.

A separate debt account is created for each defined benefit account you hold with Division 293 tax attributed to it. You receive a statement of account from this debt account whenever the account balance changes, so you can keep track of your deferred liability.

Division 293 tax revoked

If a benefit is paid from your defined benefit fund before the deferred debt account is created, your Division 293 tax deferral will be revoked and your debt will become due and payable.

End of year interest

Any deferred debts that are not paid by 30 June each year will attract end of year interest. The full amount of all unpaid deferred debts and interest will be used to calculate the amount you need to pay when you take a benefit from your fund.

By voluntarily paying your deferred Division 293 tax by 30 June each year, you will avoid paying end of year interest.

How to voluntarily pay your deferred Division 293 tax

You can voluntarily pay deferred Division 293 tax liabilities either:

• with your own money – see how to pay
• by releasing money from super - see making an election to release money from super.

Most defined benefit funds are not able to release amounts for you, check with your fund before completing the election form. But you may have other funds you can release money from.

When you take an end benefit

A deferred Division 293 tax debt must be paid when a super benefit becomes payable from the defined benefit super account it is attributed to – this is known as the end benefit.

The following super benefits are not considered end benefits:

• rollovers to a successor fund in the case of fund mergers
• severe financial hardship payments
• funds released on compassionate grounds
• family law super payments.

If you request a super benefit from your super fund, and you have a Division 293 debt account attributable to that fund, your fund will advise us of your request via the End benefit notice – superannuation provider Division 293 tax form.

Your fund must advise us within 14 days of the first of the following:

• the fund receiving a request to pay a superannuation benefit
• the superannuation benefit becoming payable.

Debt account discharge liability notice

After we receive the end benefit notice, we process your information and issue you a debt account discharge liability notice, which provides details of the amount you need to pay.

This amount may be the figure held in the debt account, or the end benefit cap amount – whichever is lower. The end benefit cap amount is calculated and provided to us by the super fund.

Payment of your debt account discharge liability is due 21 days after the day your benefit was paid.

How to pay your debt account discharge liability

At this time, you can pay the liability either:

• with your own money – see how to pay
• by using the release authority issued with the debt account discharge liability notice, to pay the debt out of your super account.

The debt account discharge liability release authority can only be presented to the fund the defined benefit super account is attributed to.

Division 293 for higher level office holders

State higher level office holders

If you're classified as a state higher level office holder who makes certain super contributions to a constitutionally protected fund (CPF), you're exempt from having Division 293 tax applied to those super contributions.

You're a state higher level officer holder if you are:

• a minister of the government of a state
• a member of the staff of a minister of the government of a state
• the governor of a state
• a member of staff of the governor of a state
• a member of the parliament of a state
• the clerk of a house of the parliament of a state
• the head of a department of the public service of a state or a statutory office holder of equivalent seniority, including a statutory office holder who is the head of an instrumentality or agency of a state
• a judge, justice or magistrate of the court of a state.

If at any time in the income year, you fall within the category of a state higher level office holder you will be treated as being a state higher level office holder for the entire income year.

Constitutionally protected funds

Constitutionally protected funds (CPFs) are untaxed super funds that don't pay income tax on contributions or earnings they receive.

CPFs are operated by some state governments in Australia for their employees.

Under the Australian Constitution, state government assets can't be taxed by the Commonwealth, so different arrangements apply to concessional contributions to CPFs.

Exempt super contributions

For state higher level office holders, generally all contributions made to a CPF, other than salary packaged contributions, are excluded from the Division 293 super contribution amount when determining the taxable contributions but are included when determining whether the threshold was exceeded.

Salary packaged contributions are made when you agreed with your employer for the contribution to be made and, in return, withholding payments are reduced.

Division 293 for Commonwealth judges

If you're a justice of the High Court, or justice or judge of a court created by the parliament, who makes super contributions to a super fund established under the Judges’ Pensions Act 1968, you're exempt from having Division 293 tax applied to those contributions.

Contributions made to one of these judges’ funds are excluded from the Division 293 super contribution amount when determining the taxable contributions but are included when determining whether the threshold has been exceeded.

Division 293 tax refund for former temporary residents

If you are a former temporary resident you may be entitled to a refund of Division 293 tax paid if:

• you received a departing Australia super payment
• you apply in the approved form for the refund.

Refund amount

Your refund will be the sum of all payments you made towards any Division 293 tax assessments while a temporary resident in Australia.

If you become a permanent resident during an income year, and you make a payment towards a Division 293 tax liability that income year, your payment won't be refunded.

How to apply for the refund

To apply for a refund, you must apply to us in the approved form – Division 293 Tax – refund or debt release application for former temporary residents (NAT 74727).

You must also provide evidence you received a departing Australia super payment, such as:

• the payment summary provided by your super fund when making the payment
• other evidence clearly demonstrating the payment was made and the reason for the payment.

Super guarantee amnesty contributions and Division 293

Contributions made under the super guarantee (SG) amnesty don't count towards your income or contributions for Division 293 purposes.

In most cases, these amounts will have already been excluded from your Division 293 calculation and you don't need to do anything.

SG amnesty contributions we have excluded are shown on page three of your Division 293 notice of assessment, under the heading ‘Division 293 super contributions’. These will be shown as a ‘Transferred to reserves strategy’ amount that is subtracted from your total concessional contributions.

If you disagree with your assessment, you may lodge an objection.

If your amnesty contributions include a late payment offset amount

If your employer made contributions to your fund and has now claimed a late payment offset (LPO) that is included under the SG amnesty, the contribution amounts will not have been excluded from your Division 293 calculation.

If you believe your Division 293 assessment includes these SG amnesty LPO amounts, you can request a simplified review of this assessment rather than lodging an objection.

To do this, you will need to know the financial year the LPO amount was contributed to your fund. If you don’t know you can ask your employer. This is the year for which we will review your Division 293 calculation.

When you have this information, you can call us on 13 10 20.

For more information, see Superannuation guarantee amnesty.

Releasing money from super for a Division 293 tax liability

You have the option to pay for your Division 293 tax liability by releasing money from super.

To do this you must complete an election form. You have up to 60 days from the date of your Division 293 assessment to make your election.

The 60-day period only provides additional time for you to decide about releasing money from super. It does not change the due date for payment of your Division 293 tax liability. Even if you are electing to release money from super, your liability should still be paid by the due date on your notice of assessment.

The quickest way to lodge your Division 293 election form is online. Your election will be immediately lodged with us, ensuring we have all the information we need to process it without delay.

When we receive a valid election form from you, we send your nominated super fund(s) a release authority to pay us the amount you've specified. The money is used to pay your outstanding Division 293 liability. Any remaining amount is used to pay other tax debts and Australian Government debts before the balance is refunded to you.

Your decision to make an election cannot be withdrawn or reversed.

Instructions to complete your election form online

You can complete an election form online using ATO online services. Select Super, then Manage, then Division 293 election.

If you don't have a myGov account, create one and link it to the ATO.

If you're unable to complete your election online

If you are unable to complete your election online, you can:

• ask your tax agent to do it for you using ATO online services for agents
• complete a paper copy – see Division 293 tax – election forms.

If your income and concessional super contributions total more than $250,000, check if you have to pay Division 293 tax.