Payment of Division 293 tax
The time at which assessed Division 293 tax becomes due and payable differs, depending on whether the amount assessed is attributable to contributions in an accumulation interest or a defined benefit interest.
Payment – Individuals who have contributions in an accumulation interest in a super fund
An individual is liable for the payment of this tax.
If Division 293 tax has been raised on contributions made to an accumulation interest, the tax is due and payable 21 days after the Commissioner of Taxation gives individuals their notice of the assessment. The exact date of payment will be printed on the notice of assessment.
If the due and payable remains unpaid after the 21 days it will accrue general interest charge (GIC). See the section on Interest charges for more information on GIC.
How to pay
An individual can pay their due and payable Division 293 tax liability either:
- out of their own monies, or
- use a Division 293 tax release authority (this is issued with the notice of assessment).
Using a release authority
The individual can take the release authority they received with the notice of assessment to their accumulation super fund to have the money released. The individual can also choose to have the entire amount or a partial amount released from one fund, or have partial amounts released from a number of funds. To do this, photocopies can be made and presented to the funds, as long as there is an original signature on each photocopy and the total amount released does not exceed the amount of the Division 293 tax.
Where the individual chooses to have the super fund pay the money they can nominate who the amount is to be released to, either:
- the individual, or
- the ATO.
Whether the individual receives the payment themselves or they ask the fund to release the amount, the due date for payment remains 21 days after they received the notice of assessment.
If a release authority is used, we acknowledge that this may create timing issues because the super fund is allowed 30 days to process the authority. In these circumstances, we will be sympathetic in our consideration of any application for remission of GIC (general interest charge) that accrued while the fund processed the authority.
Payment – Individuals who have contributions in a defined benefit interest in a Super Fund
If the individual has an amount of defined benefit tax raised as part of their Division 293 tax assessment, then payment of that part of their liability will be deferred until they take an end benefit from that interest.
The deferral determination will be included on the individual's notice of assessment. The total amount of defined benefit tax will be deferred to a debt account.
Division 293 tax debt account
When we determine a deferred Division 293 tax debt, we must:
- establish and maintain a Division 293 tax debt account
- debit the debt account with the amount of assessed Division 293 tax for that superannuation interest
- apply and debit end-of-year interest, at the end of the financial year, where there is a debit balance
- notify the defined benefit superannuation fund of this account.
If the individual has more than one defined benefit interest, then more than one debt account will be established. The defined benefit tax attributed to each account will be in the same proportion to which the defined benefit contributions are attributed across the defined benefit interests.
Tanya is a contributing member to two defined benefit funds. The elements that make up her Division 293 tax calculation are:
- income of $300,000
- defined benefit contributions from fund 1 of $25,000
- defined benefit contributions from fund 2 of $15,000.
Tanya's low-tax contributions amount of $40,000 ($25,000 + $15,000) is also her taxable contributions amount. The Division 293 tax amount is $6,000 ($40,000 x 15%).
The proportion of the defined benefit contributions, compared to the taxable contributions, for the two interests are as follows:
- Fund 1: Defined benefit contributions ($25,000) / Taxable contributions ($40,000) = 0.625
- Fund 2: Defined benefit contributions ($15,000) / Taxable contributions ($40,000) = 0.375.
The Division 293 tax attributed to each defined benefit interest is:
End of example
- Fund 1: 0.625 x $6,000 = $3,750
- Fund 2: 0.375 x $6,000 = $2,250.
A debit balance at 30 June will accrue end-of-year interest at the long-term bond rate. See the Interest charges section for more information on end of year interest.
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Voluntary payments for a deferred amount
An individual can choose to pay a deferred Division 293 tax debt before the debt is due. They can do so by either:
- paying the debt out of their own monies, or
- using a Division 293 tax release authority (this is issued with the notice of assessment).
When a pre-payment is received, a statement of account will be issued to the individual as a record of the current balance of the account.
Using a release authority
The individual can take the release authority they received with their assessment to their super fund to have the money released. However, the individual can only present this release authority to a super fund that holds an accumulation interest from which the money can be released.
The individual can also choose to have the entire amount, or a partial amount, released from one fund, or have partial amounts released from a number of funds (if they hold accumulation interests). To do this, photocopies can be made and presented to the funds, if there is an original signature on each photocopy and the total amount released does not exceed the amount of the Division 293 tax.
A super fund actioning a release authority for a deferred Division 293 tax debt can only release the money to the ATO. This option is pre-filled on the authority.
When a deferred debt becomes due and payable
A deferred Division 293 tax debt must be paid when a super benefit becomes payable from the defined benefit super interest it is attributed to – this is known as the end benefit. However, there are a number of super benefits that are not considered end benefits; these are:
- rollovers to a successor fund in the case of fund mergers
- severe financial hardship payments
- funds released under compassionate grounds
- a family law super payment.
Taking an end benefit
When an individual requests a super benefit be paid from defined benefit interest in their super fund, and they have a Division 293 debt account attributable to that interest, they must advise us of that request on an End benefit notice.
The form must be submitted to us within 21 days after making the request of the super fund.
The super fund that holds the defined benefit interest also has an obligation to provide us with information in these circumstances. This should be done on the End benefit notice - superannuation provider form. The super fund will advise us of the end benefit cap so that we can calculate the debt account discharge liability.
The debt account discharge liability is the lesser of the figure held in the Division 293 debt account, and the end benefit cap.
If the individual and/or the super fund become aware of a material change or omission in any information given on the end benefit notice, they must send a new end benefit form with the omitted or corrected information. The form must be submitted to us within seven (7) days of becoming aware of the change and/or omission.
Debt account discharge liability notice
The due date for payment of the debt account discharge liability is 21 days after the day the benefit was paid from the super fund. The individual can pay this liability either:
- out of their own monies, or
- by using a release authority, which will be issued with the debt account discharge liability notice, to have the debt paid out of their super account.
If the individual uses the release authority, it can only be presented to the super fund which holds the defined benefit interest the deferred debt was attributed to. The name of the fund will be pre-filled on the release authority.
The super fund can only release the money to us. This option will also be pre-filled on the authority.
Payment of deferred debts on death of the individual
When a super fund pays a super death benefit, the super fund must calculate the end benefit cap as if it is still a life benefit and was paid just before the individual died.
We will issue the debt account discharge liability to the estate of the individual for payment. A release authority will not be issued with this notice.
Extension of due date for Division 293 tax deferred debt when deferral has been revoked
Until further notice, we have deferred the due and payable date for certain Division 293 tax liabilities for taxpayers who satisfy all of the following conditions:
- the taxpayer received a notice of assessment for Division 293 tax that indicates payment had been deferred – this was because the Division 293 tax raised was attributed to contributions made to a defined benefit superannuation interest
- the taxpayer had left the fund to which the deferred debt relates before the assessment was issued
- we issued the taxpayer with a letter advising them that their deferral of Division 293 tax has been revoked (revocation notice) and they need to pay their Division 293 tax assessment.
For a taxpayer who satisfies all of the above conditions, the due date for payment of the Division 293 tax is deferred to 21 days after the revocation notice issued.
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Deferral of payment
Subsection 255-10(2A) of Schedule 1 of the Taxation Administration Act 1953 allows us to defer the time for payment of tax-related liabilities (including withholding tax) due and payable by a class of taxpayers. We defer the payment by publishing a notice on our website. We can defer the time for payment, whether or not the liability has already arisen.