by Duc Hong
Today’s article is simply to show the calculations, and reality, of how Additional tax on concessional contributions work.
Application of Division 293 of the Income Tax Assessment Act results in high income earners paying additional tax on their concessional superannuation contributions.
From 1st July 2017 it applies to individuals with Division 293 income plus Division 293 superannuation contributions of $250,000 or more.
Division 293 income includes:
Division 293 superannuation contributions include:
The Division 293 tax is calculated at 15% on the lower of:
The ATO matches information from individual tax returns and superannuation fund reporting to calculate and issue Additional tax on concessional contributions (Division 293) notices. There are two options to pay the Division 293 tax assessment:
In practice the provisions of Division 293 make it very difficult to plan and manage the tax liability in any meaningful way, particularly where an individual has triggered a capital gain or receives an eligible termination payment that pushes them over the $250,000 limit for a year.
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