In the 2013 financial year the government introduced Division 293; it’s effectively a tax on high income earners as it requires you to pay an additional 15% tax on your superannuation contributions if your adjusted income exceeds $300K.
To understand if you’re liable to pay this additional tax it’s not as simple as saying my taxable income is less than $300k. What you’ll notice in the table and graphic below is that your taxable income is merely the starting point of the calculation; you need to add back things like reportable fringe benefits, rental losses and salary sacrificed superannuation to get to your Adjusted Income. The example is basic, but it gives you idea of how Div 293 might apply to you.
| Example 1 | Example 2 | |
| Taxable income | 260,000 | 280,000 |
| Plus – Reportable Fringe Benefits | 15,000 | – |
| Plus – Rental Losses (negatively geared) | 7,000 | 14,000 |
| Plus – Other Investment Losses (margin loan) | – | 6,000 |
| Plus – Salary Sacrificed Superannuation | – | 3,400 |
| Plus – Super Contributions | 24,700 | 26,600 |
| Total Div 293 income | 306,700 | 330,000 |
| Less Threshold | 300,000 | 300,000 |
| Excess contribution | 6,700 | 30,000 |
| Additional 15% tax on superannuation contribution | 1,005 | 4,500 |
Importantly if you owe Div 293 tax, you can choose to pay it out of your own money or from your super fund.
One of the best ways to address the Div 293 issue or concerns is through a taxation planning meeting in conjunction with our Wealth & Risk Management division, we will address this issue with you and outline the best possible outcomes for you.
Book a meeting with our practice to learn more about Div 293.
