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  • Division 293 for defined benefit members

    For the 2013–14 and later financial years, funds are required to report defined benefit contributions.

    The amount of defined benefit contributions represents the annual increase in a defined benefit superannuation account based on the benefit individuals are expected to receive when they leave the fund.

    The 2012–13 financial year was a transitional year for Division 293 tax, where the full value of a defined benefit contribution was not reported.

    For the 2012–13 financial year only, Division 293 tax for defined benefit contributions was calculated on a notional contributions amount reported by the fund.

    If you are a member of a defined benefit super fund, you do not have access to these contributions even if the Commissioner gives authority for amounts to be released. In these instances, you will still be assessed for Division 293 tax but the Commissioner will defer payment of the amount until a benefit is paid from your defined benefit fund.

    Modification to the Division 293 tax calculation

    There is a modification to the way low-tax contributions are calculated for defined benefit accounts. In the following steps:

    • add together all concessionally taxed contributions made to an accumulation account in a super fund, including an accumulation account in a constitutionally protected fund (CPF).
    • disregard any excess concessional contributions exceeding the concessional contributions cap for the year.
    • add the defined benefit contributions (as reported on the MCS).

    Deferred Division 293 tax

    Payment of Division 293 tax is deferred if raised on a defined benefit account from which no super benefit has yet become payable.

    Money generally can't be released from a defined benefit account until a super benefit is paid (usually on retirement).

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

    How will you 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 prior to the deferred debt account being 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

    When a debt is raised and deferred, a release authority is sent to you linked with that debt account – this is the release authority that must be used if you choose to pre-pay your deferred debt.

    You can voluntarily pay deferred Division 293 tax liabilities either:

    • out of your own pocket – see how to pay
    • by using the release authority form, issued with the assessment, to pay the debt out of your super account. In most cases to do this you will need to have a second super fund that will allow you to access your contributions.

    Note: When your super fund releases the money to pay your deferred debt, they must send the payment directly to us.

    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.

    However, 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 under 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:

    • 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:

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

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

      Last modified: 05 Jan 2018QC 36272