Division 293 was introduced as an initiative to even out the concessional tax treatment that higher income earners enjoy on some superannuation contributions. This results from super contributions made before tax being taxed at 15% within a fund, and the higher relative difference in marginal rates for high-income earners compared to the average.

“If you are a high income earner, your marginal tax rate is higher than an average income earner,” the ATO says. “When you make concessional contributions to your fund, you receive a larger tax concession. Division 293 imposes an additional tax of 15% to bring the concession back to an amount in line with the average.”

And a client who is not usually considered to be a high-income earner may still be subject to a Div 293 notice. An assessment for Div 293 can come about because of one-off events, such as if a client received an eligible termination payment, makes a significant capital gain, or experiences a significant increase in income from any other unforeseen development.

So if you have clients at or near the income threshold of $250,000, it may pay to have relevant information handy. Division 293 tax is payable on the excess over the threshold, or on the super contributions, whichever is less.

When Div 293 (“Sustaining the superannuation contribution concession”) was introduced in the 2013-14 year, the threshold at which it applied was set at $300,000 annual income for each individual. However from 1 July 2017 this threshold reduced (in contrast to many other income thresholds and limits), and is now set at $250,000. Readmore