Division 293 of the Income Tax Assessment Act 1997 was introduced in Australia on July 1, 2012. It was established to address the perceived imbalance in tax concessions on superannuation contributions for high-income earners. The primary goal was to limit the tax advantages of superannuation for those with higher incomes, ensuring a fairer distribution of tax benefits.
Under Division 293, individuals whose combined income exceeds a specified threshold ($250,000 from 2017-18 income year) are subject to an additional 15% tax on the excess over the threshold or the taxable super contributions, whichever is less. The combined income including below components:
- taxable income (assessable income minus allowable deductions)
- total reportable fringe benefits amounts
- net financial investment loss
- net rental property loss
- net amount on which family trust distribution tax has been paid
- super lump sum taxed elements with a zero tax rate
- assessable first home super saver released amount.
This effectively increases the total tax rate on their superannuation contributions, aligning it more closely with their marginal tax rates.
Please contact our office for any further enquiries.
