What you need to know about Division 293.

Division 293: A Surcharge on High-income Earners’ Superannuation

Introduced in 2012, Division 293 is a surcharge tax imposed on high-income earners that reduces the tax concession received on pre-taxed super contributions.

Under the current Division 293 rules, any individual whose combined income and concessional super contributions exceeds $250,000 in a financial year is liable to pay an additional 15% tax on part or all of the super contributions made in the same year. The additional 15% tax only applies to pre-tax super contributions above the $250,000 threshold. Below is a list of super contribution methods that the ATO includes when calculating Division 293:

  • Compulsory super contributions made by your employer
  • Salary-sacrificed super contributions
  • Voluntary super contributions which you have claimed a tax deduction for
  • Defined benefit super contributions

Importantly, Division 293 applies even in years where your income was boosted by a one-off event, such as the capital gain on the sale of an investment property or the disposal of shares. Once an individual lodges their tax return, the ATO will send correspondence directly to your myGovaccount detailing the Division 293 tax liability. The ATO will include their calculation of the additional tax liability you must pay.

There are two methods of paying a Division 293 tax liability:

  1. Pay using personal funds
  1. Elect to release money from any of your existing super balances by completing a Division 293 election form. 

Each individual has their own unique circumstance which means the most appropriate course of action isn’t always clear, we are here to help.If you are a high-income earner and receive a Division 293 letter from the ATO, please do not hesitate to get in touch with our office to discussion your options.