How it works
The ATO adds your income for Division 293 purposes (broadly taxable income, reportable fringe benefits and certain other amounts) to your low-tax concessional contributions. If the total is over $250,000, the tax applies to the excess or to the contributions, whichever is less. The rate is 15%.
The $250,000 threshold has applied since 2017–18 and is not indexed.
An example in words
Say your income is $240,000 and concessional contributions are $30,000. The total is $270,000, which is $20,000 over the threshold. Division 293 applies to the smaller of $20,000 and $30,000, so 15% of $20,000.
Paying it
The ATO issues a notice after you lodge your tax return and your fund reports contributions. You can pay personally or elect to release the amount from super. For defined benefit interests, payment can be deferred.
Is super still worth it?
Usually, yes. At 30%, contributions are still taxed below the top marginal rate of 45% plus Medicare levy. The question is how much, and in whose name. Business owners often have choices about timing income, which is where advice for business owners helps.
Quick answers
What is the Division 293 threshold?
$250,000 of income plus low-tax contributions, at a 15% rate, per the ATO.
Can I pay Division 293 from super?
Yes, you can elect to release money from your super fund to pay it.
Sources
General advice warning. This article is general information only and does not take into account your objectives, financial situation or needs. Rules and thresholds change; check the sources above. Consider the relevant PDS and our Financial Services Guide and seek personal advice before acting. FinForce is authorised under Financial Force Pty Ltd AFSL 238337. Shay has been authorised since 18 October 2011.