Low tax contributions to your super fund

Understanding Low tax Super Contributions Tax (Division 293) and Your Income Tax Return

Division 293 tax can be a complex aspect of your income tax return. This tax uses contribution information reported on an individual’s member contributions statement (MCS) to determine the total super contributions. Let's break down how it works and how it impacts your income tax return.

Index

1. What is Division 293 Tax?
2. Types of Contributions Considered
3. Low-Tax Contributed Amounts
4. Calculation of Low-Tax Contributions
5. How to Lodge Your Income Tax Return

What is Division 293 Tax?

Division 293 tax is a tax on high-income earners' superannuation contributions.

It aims to reduce the tax concessions received by individuals whose income and super contributions exceed a certain threshold.

This tax is part of your income tax return and is crucial to understand if you want to maximise tax deductions and ensure a maximum refund.

Types of Contributions Considered

The contributions that are counted for Division 293 tax purposes generally include:

• Employer-contributed amounts: Contributions made by your employer.
• Other family and friend contributions: Contributions made on your behalf by family or friends.
• Assessable foreign fund amounts: Contributions from foreign funds that are assessable.
• Assessable amounts transferred from reserves: Amounts moved from super fund reserves.
• Personal contributions for which a deduction has been claimed: Personal super contributions that you have claimed as a tax deduction.
• Defined benefit contributions (funded and unfunded): Contributions to defined benefit funds.

Low-Tax Contributed Amounts

These contributions are concessionally taxed within the super fund and are known as low-tax contributed amounts. It’s important to note that low-tax contributed amounts are not the same as low-tax contributions. Understanding this difference is key to accurately completing your income tax return and maximising your tax deductions.

Calculation of Low-Tax Contributions

To calculate which contributions are low-tax contributions, the ATO disregards any excess concessional contributions. For the 2012–13 financial year, contributions subject to excess contributions tax are taxed an extra 30% (excluding Medicare levy) on top of the 15% tax paid by the super fund. This additional tax impacts how you calculate your taxable income and affects your income tax return.

How to Lodge Your Income Tax Return

Lodging your income tax return can be straightforward with the right tools. Consider using GoTax Online for a hassle-free experience. Here are some options:

• Quick Tax Return: $15
• One with the Lot: $55
• First Time Free: If it’s your first time, you can lodge for free!

Using GoTax Online ensures that you accurately report your contributions, maximise your tax deductions, and receive the maximum refund possible.

By understanding Division 293 tax and its implications, you can better prepare your income tax return and avoid any potential issues. Always keep detailed records and consider consulting with a tax professional if you have any doubts. For an easy and efficient way to handle your tax return, visit gotax.com.au and take advantage of their expert services.

Note that the information provided is general in nature and subject to change, please contact one of our Gotax professionals who can evaluate your circumstances and provide more accurate advice to your current situation.