Prompt action is required on division 293 tax notices in order to avoid interest payments and penalties, according to a specialist superannuation lawyer.
Speaking at the SuperCentral Bacon, Super and Eggs Seminar in Sydney on Friday, Townsend Business and Corporate Lawyers superannuation solicitor Caroline Harley stressed the importance of lodging division 293 notices quickly.
“It’s almost an incentive to pay now so [members] don’t have to pay any other interest on it,” Harley said.
Once a division 293 assessment notice has been issued, members have 21 days to pay the Australian Taxation Office (ATO) or lodge release forms with their superannuation providers, or interest will also be payable.
Division 293 assessments are issued when surcharge income and low tax contributions are in excess of $300,000 in a financial year.
“It basically means that people who qualify as being very high income earners lose certain tax concessions,” Harley said.
The changes were announced in the 2012 federal budget, but were not introduced until June 2013.
Changes were being applied retrospectively from the 2013 financial year, and it was estimated about 128,000 people would be issued with notices for that period, Harley said.
She likened the notifications to a “reverse franking credit”.
“Obviously, with a franking credit too much tax has been paid and you can seek a reimbursement,” she said.
“Here, this is where not enough tax has been paid and you receive a bill to pay the extra.”
If an adviser receives a division 293 assessment notice, there are three payment options available.
Members could elect to pay it from their own pocket; pay upfront and use a release form for reimbursement from their superannuation fund; or fill out a release form and have their superannuation fund pay the ATO directly, Harley said.
Regardless of what method they chose, she said members should act quickly, seek reimbursement promptly and, in the case of a deferred payment, be made aware of their obligation to lodge the form with the ATO to avoid interest being charged annually.