Fabian Bussoletti said as the 31 October due date for lodging personal income tax returns has passed, the ATO will begin issuing the notices.
“When determining an individual’s liability to Division 293 tax, the ATO uses information obtained from the individual’s personal income tax return, as well as information reported to the ATO by their super fund,” he said.
“While Division 293 tax only applies to individuals who had total income above $250,000 for the 2022-23 financial year, those affected will be required to pay an additional 15 per cent tax on their 2022–23 concessional contributions or at least those that are within the individual’s concessional contribution cap.”
He said it is important to note that an individual is personally liable for the payment of any Division 293 tax liability that arises.
“Any resulting liability must generally be paid within 21 days of the assessment being issued to avoid penalties,” he added.
“However, individuals may elect to release an amount from their fund, within 60 days of the issue date, to pay the tax debt instead.”
If individuals chose the second option to pay, Mr Bussoletti, said the ATO will issue a release authority to the individual’s nominated superannuation fund.
“The super fund will need to pay the requested amount directly to the ATO within 10 business days,” he said.
Mr Bussoletti continued that while an individual has 60 days to elect for an amount to be released from their super fund(s), payment of the liability remains due within 21 days of the Division 293 tax assessment.
“Therefore, to avoid additional penalties being imposed, affected individuals should consider personally paying their tax liability by the due date even if they intend to elect for monies to be released from their superannuation fund,” he said.
“Where the tax liability is extinguished before the fund releases monies to the ATO, the ATO will generally refund any released amounts to the individual unless the individual has any other tax or Australian Government debts owing.”
Fund trustees who receive a release authority should follow the usual time frames and processes for responding to ATO-issued release authorities in the SuperStream rollover standard.
He concluded that it is also important to remember to ensure that a fund’s Electronic Service Address (ESA) complies with the rollovers and release authorities standards.
