Division 293 Tax: Understanding Additional Contribution Tax and Your Options
In the realm of self-managed super funds (SMSFs), comprehending the tax implications is fundamental for bolstering a secure financial future. One tax dimension that warrants attention is the Division 293 tax, which aims to equalise the tax concessions on super contributions for individuals with varying income levels.
Unpacking Division 293 Tax
Division 293 tax is levied when an individual’s income coupled with any concessional contributions to their super exceeds $250,000 in a financial year. Specifically, a 15% tax is applied either on the excess over the threshold or the total concessional contributions, whichever amount is lower. This tax is over and above the 15% tax that is usually applied to concessional contributions.
Strategies to Address Division 293 Tax
Upon receiving a Division 293 tax assessment, individuals have a couple of viable options:
1. Funds Release Authority: Acquiring a Funds Release Authority enables the release of funds from your self managed super fund to cover the additional tax. In this scenario, your SMSF pays the Division 293 tax directly.
2. Personal Payment: Alternatively, individuals can opt to pay the Division 293 tax independently. This method is advantageous as it retains more capital in your self managed super fund
The Value of Professional Guidance
Tackling tax nuances within SMSFs can be a labyrinthine task. Engaging with a Chartered Accounting firm adept in SMSF setup and administration can offer invaluable insights and bespoke solutions for your financial circumstances. Our firm is proficient in providing comprehensive solutions to effectively manage Division 293 tax, ensuring that your SMSF remains a sturdy foundation for your financial well-being.
Do you require assistance in managing your Division 293 tax or need guidance with SMSF setup and administration? Our experienced team of Chartered Accountants are at your service to navigate you through every phase of the process. Get in touch with us for all your SMSF and Division 293 concerns, and let us assist in solidifying your financial landscape.