Extra 15% super contributions tax for high income earners

In January 2014, the ATO will start issuing the first assessments for the new Div 293 tax for individuals above the $300,000 high income threshold for the 2012–2013 financial year.

In its latest SMSF News (Edition 27), the ATO says it will determine who is liable to pay the Div 293 tax by adding together an individual's income for surcharge purposes and "low tax contributions". The ATO says that if these amounts total more than $300,000, the individual is liable to pay the extra 15% Div 293 tax on their "low tax contributions" (essentially concessional contributions). As a result of this new Div 293 tax, the effective contributions tax has been doubled from 15% to 30% for certain concessional contributions (up to the concessional cap) for "very high income earners" with income (plus the relevant concessional contributions) above the $300,000 threshold.

The Commissioner says Div 293 tax debts generally need to be paid 21 days after receipt of the notice of assessment, although there may be a part of the Div 293 tax debt that is deferred. Deferred debts are attributed to defined benefit accounts and do not need to be paid until the end benefit is taken from defined benefit funds. Importantly, the ATO notes that there are no additional requirements for the SMSF annual return in respect of the Div 293 tax.

Source: ATO SMSF News (Edition 27), www.ato.gov.au/Super/Self-managed-super-funds/In-detail/News/SMSF-News/SMSF-News---edition-27/?default=&page=1.