ATO confirms division 293 tax payment method

Division 293 tax payment

The ATO has informed SMSF trustees and tax agents that division 293 tax liabilities can be paid from superannuation monies.

The ATO has advised the SMSF sector that payment of tax liabilities incurred under division 293 of the Income Tax Assessment Act 1997 can be made by amounts released from superannuation funds, however, a prescribed process must be followed in order to do so.

To do so, the SMSF regulator emphasised a request to the Commissioner of Taxation opting for this course of action must be lodged via an election form.

It pointed out individuals have to make their election within 60 days of receiving their division 293 assessment and made clear how this time period operates.

“The 60-day period only provides additional time for you to make a decision about releasing money from super. It does not change the due date for payment of your division 293 tax liability,” it said.

“Even if you are electing to release money from super, your liability should still be paid by the due date on your notice of assessment.”

Further, the regulator recommended the election form be submitted online to enable the process to be more efficient.

“When we receive a valid election form from you, we ask your nominated super fund(s) to send the amount you have specified to us using a release authority. The money is used to pay your outstanding division 293 liability,” it said.

Division 293 tax is an additional liability incurred on superannuation income generated from contributions that exceed $250,000.

In a separate announcement, the regulator confirmed commutation authorities issued to SMSFs need to be enacted by the due date regardless of which day that might be during the Christmas and New Year period.

It stipulated any amendments needed to the information used in issuing the commutation authority must be received and processed by 10 December for a further notice revoking the initial commutation authority to be disseminated before Christmas.

“If your member is concerned about the information we have relied on when issuing the commutation authority, they and their agent can see all the events which make up their transfer balance account in ATO Online,” it pointed out.

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