The ATO said SMSF funds may receive the additional tax on their super contributions if their combined income and contributions are greater than the threshold during the financial year. This threshold is currently $250,000.
It will determine if there is a Division 293 liability once the member has lodged their tax return, and the SMSF has lodged its annual return.
The ATO explained that if a member has a liability it will send a Division 293 notice of assessment.
There are a number of options available if a Division 293 notice is sent including to pay it by electing to release some of the contributions from the SMSF.
Payment of this liability is the responsibility of the individual who received it and it must be paid by the due date on the assessment. Individuals have 60 days to elect to release money from super to pay the Division 293 liability however this does not change the actual due date for payment.
An SMSF can’t release any amounts until the member has made an election to release money from their super and the SMSF has received a release authority from the ATO.
Once the member has made the election, the ATO will send a release authority through to the SMSF messaging provider. If the SMSF does not have a messaging provider, it will receive a paper form.
Once the member has actioned the release authority, they are required to pay the ATO the amount. It will then use this amount to pay the Division 293 liability. Any remaining amount is offset against other debts before being paid to the member.
