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2017 Superannuation changes  

The Federal Government May 2016 Budget announcements for superannuation, many of these changes will now come into effect on the 1st July 2017.

 

REDUCTION OF DIVISION 293 Income Threshold reduced to $250,000

 

Tax Law Division 293 is triggered when your income and Concessional super is in excess of $300,000. 

 

Under the new rule changes starting 1st July 2017, the limit is reduced to $250,000 and income/s are now assessed as follows:

Taxable Income

Employer Super contributions

Your Salary Sacrifice to super contributions

Fringe Benefits

Investment Losses

 

As an example

In the 2015-2016 financial year, Mark earns $320,000 and his employer contributes $20,000 to his super fund.  Mark super fund pays tax at 15% of $20,000 = $3,000

If Mark's employer had not contributed to super, then Marks salary will increase by $20,000 to $340,000, and the additional $20,000 would be taxed at the marginal rate of 49% = $9,800.

 

The tax concession Mark would receive on his contributions is $6,800.

 

By paying Division 293 tax of $3,000 (15% x $20,000) Mark still receives a concession but it is reduced.

 

Tha amount of tax paid on the contribution is $6,000 (30% x $20,000), made up of 15% tax on the super fund and 15% Division 293 tax.  The tax concession is now $3,800.

 

The ATO uses information from your Income Tax return and your super contributions reported by your super fund to work out the Division 293 tax.

 

 

 NOTE: The new limit is reduced to $250,000 from 1st July 2017 and please note above what is included as income for Division 293. 

 

The above was taken from the ATO web site for information purposes only.

 

For many people, their super is the second biggest asset owned and so often, the most neglected.  If you have any questions regarding your Super or Division 293, please don't hesitate to conbtact this office for a free consultation.