Superannuation, Tax

Watch Div 293 payment timing

Division 293 tax Release authority SuperStream SMSF Heffron Meg Heffron

SMSF members required to pay a Division 293 tax bill have been cautioned not to act too quickly and to follow the correct ATO process.




SMSF members who are charged the Division 293 tax should be aware there is a specific order in how to pay it and should not act hastily upon receiving an assessment notice from the ATO, an administration provider has cautioned.

Heffron managing director Meg Heffron said while the Division 293 tax appears related to superannuation, as it is levied on people earning more than $250,000 each year who also made concessional contributions, it was a personal impost that was usually paid by the individual but could be settled via a fund if requested by the individual.

However, Heffron noted the process to do this with an SMSF differed from an Australian Prudential Regulation Authority-regulated fund and it was easy to make mistakes.

“Don’t pay it from your SMSF as soon as you get notified you have a bill. If you read the ATO’s letter carefully, you’ll see it offers you two options – pay immediately from your own money or elect to release money out of your super fund to pay the bill,” she said in a recent blog post.

“A mistake lots of SMSF members make is to simply pay the bill directly from their super fund at that point. It’s fine to pay this bill from super eventually, but timing matters.”

She pointed out anyone who could not normally access their super had to wait until the ATO issued their SMSF trustee with a release authority and then make the payment via SuperStream to ensure the regulator was aware it was being made.

“Members of large super funds don’t get this wrong because they don’t control their fund’s bank account. So it’s a natural thing to just let the ATO know the super fund will be paying the bill. The large super fund eventually receives the release authority and pays the bill,” she said.

“The reason it’s confusing for SMSF members is that they are usually also the trustee so they control both their own bank account and the SMSF’s.

“Given that the first letter from the ATO provides all the payment details, it’s natural to just pay it, even if the payment is being made from the SMSF, but you need to wait for the release authority to issue.

“Perhaps the most important thing to do is read the ATO’s letter carefully and only do what it tells you to do.”

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