On 28 June 2013, the Superannuation (Sustaining the Superannuation Contribution Concession) Imposition Bill 2013) and the Tax and Superannuation Laws Amendment (Increased Concessional Contributions Cap and Other Measures) Bill 2013 which give effect to this measure received royal assent.
Previously, a 15% flat tax on concessional contributions (paid by the receiving superannuation fund) provides high income earners with a larger tax concession than those on lower marginal tax rates.
From 1 July 2012
1. The new legislation imposes an additional 15% tax on “Division 293 taxable contributions” for taxpayers above the high income threshold of $300,000, the effective contributions tax will be 30% for such amount.
2. If the sum of an individual’s “income for surcharge purposes” (less reportable superannuation contributions) plus “low tax contributions” (i.e. concessional taxed contributions up to the cap amount) exceeds $300,000 for an income year, an extra 15% tax is payable.
3. A taxpayer’s “low tax contributions” will essentially be her or his concessional contributions less any excess concessional contributions for the year. This means the 30% of superannuation contribution tax will not apply to excess contributions. Excess concessional contributions are already effectively taxed at the individual’s top marginal tax rate.
4. Higher contribution tax is imposed personally. The individual may request their super fund pay additional tax on their behalf.
Example: An individual tax payer has $285,000 taxable income and $25,000 concessional contributions. The $25,000 concessional contributions will be taxed as follows: the $10,000 exceeding the $300,000 threshold will be taxed at 30% and the remaining $15,000 will be tax at 15%.
Income Tax Assessment Act 1997
293-1 What this Division is about
This Division reduces the concessional tax treatment of certain superannuation contributions made for very high income individuals.
The high income threshold is $300,000.
There are special rules for defined benefit interests, constitutionally protected State higher level office holders, certain Commonwealth justices and temporary residents who depart Australia.
