Division 293 was introduced to ensure that high-income earners pay an additional tax on their concessional superannuation contributions.

The threshold for Division 293 is $250,000 of income and concessional contributions. If an individual’s income and concessional contributions exceed this amount, they will be subject to an additional tax of 15% on the excess contributions, in addition to the 15% tax already paid by their superannuation fund. This means that their concessional contributions are effectively taxed at 30% instead of the standard 15%.

For example, let’s say John earns a salary of $300,000 per year and has concessional superannuation contributions of $30,000. His income and concessional contributions exceed the Division 293 threshold of $250,000, so he will be subject to an additional tax of 15% on the excess $30,000 in contributions. This means that he will have to pay an extra $4,500 in tax ($30,000 x 15%).

It is important to note that Division 293 only applies to concessional superannuation contributions, which include employer contributions and salary sacrifice contributions. It does not apply to non-concessional contributions or investment earnings within the superannuation fund.

Overall, Division 293 is a way for the government to ensure that high-income earners pay their fair share of tax on their superannuation contributions. While it may increase the tax burden for some individuals, it is an important measure to ensure the sustainability of the superannuation system for all individuals.

If you have questions on how Division 293 may affect you, please contact our office at 03 9973 5905.