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ATO, Superannuation

Potential confusion flagged with division 293 notices

A technical specialist has detected an anomaly in the redesigned ATO division 293 assessment notices relating to situations where SMSF trustees have entered into a contribution reserving strategy.

SuperConcepts technical services and education general manager Peter Burgess told selfmanagedsuper the new “additional tax on concessional contributions (division 293) notice” has one section on page three that shows details of the division 293 assessment calculations, including a summary of the income amounts and superannuation contributions used in the calculation.

“The notice may list the amount that has been reserved as an excess concessional contribution because it has been based on information reported to them by their fund, which was required to report the contribution as being allocated to the member, when it really hasn’t been,” Burgess said.

“So advisers and clients may be getting these notices or they may be looking at the contribution total and being a bit concerned that division 293 tax has been calculated on all of that if they’ve put in place a reserving strategy, when that shouldn’t be the case.

“That’s on the assumption that they have lodged a request to adjust their concessional contributions with the ATO.”

He suggested it is worth practitioners checking to ensure the ATO has processed a request to adjust lodged contributions.

“The problem with the form is you can’t actually lodge it electronically. You either have to post it to the ATO or if you’re a tax agent, you can do it via the portal,” he said.

“So there’s always the risk that the form may get lost or may not end up being processed the way it should be.”

He clarified, however, that this will have no bearing on the actual calculation of division 293 tax and the tax amount payable that is listed on the division 293 assessment notice itself.

“Whether they have lodged a request to adjust their concessional contributions form with the ATO is irrelevant for the purpose of division 293 tax,” he noted.

He pointed out this figure will still be correct as the excess concessional contributions are excluded from this calculation.

The ATO is seeking to fix this to avoid confusion, he noted.

He said he presumes this means in the event a member enters into a concessional contribution reserving strategy, as long as the member has lodged a request to adjust their concessional contributions form with the ATO, the amount that has been reserved should not appear on the member’s division 293 assessment notice as an excess concessional contribution.

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