Understanding Division 293 Tax
If you have received a Division 293 tax notice from the ATO, you may be able to pay the amount either personally or by electing to release money from your super fund, including your SMSF.
Division 293 tax is an additional tax that applies to higher income earners where their income and concessional super contributions exceed the relevant threshold. The tax is assessed to the individual member, not directly to the super fund.
Your options
When you receive a Division 293 notice, you generally have two options:
- Pay the tax personally using the payment details on the ATO notice; or
- Elect to release the amount from your super fund.
If you choose to release the money from your SMSF or another super fund, you must first lodge the election with the ATO. The super fund should only make payment after the ATO issues a Release Authority.
For SMSFs, this order is very important:
Member lodges election → ATO issues Release Authority → SMSF pays the ATO
The SMSF should not simply pay the Division 293 amount using the BPAY details on the member’s personal ATO notice.
Steps to elect to pay from super
Step 1: Log in to myGov
Log in to your personal myGov account and select Australian Taxation Office from your linked services.
Step 2: Go to ATO Online Services
Once inside ATO Online Services, go to:
Super → Manage → Division 293 election
The wording may change slightly depending on the ATO system layout, but the Division 293 election is usually found under the Super section.
Step 3: Select the Division 293 notice
Choose the relevant Division 293 election. Make sure you check the:
- financial year;
- issue date;
- amount payable;
- due date.
This is important if there is more than one notice or election available.
Step 4: Choose the super fund
Select the super fund you want the money released from. This could be an industry fund, retail fund or SMSF.
If you are using your SMSF, make sure the SMSF details are correct and notify your accountant or SMSF administrator that a Release Authority will be issued by the ATO.
Step 5: Enter the release amount and lodge the election
Enter the amount you want released from super, review the details carefully and submit the election.
Keep a copy or screenshot of the lodgement confirmation for your records.
What happens after the election?
After the election is lodged, the ATO will issue a Release Authority to the nominated super fund.
If the nominated fund is an SMSF, the SMSF trustee or administrator must wait for the Release Authority before paying the amount to the ATO.
Once received, the SMSF should:
- review the Release Authority;
- complete the Release Authority Statement;
- pay the ATO using the payment details provided with the Release Authority;
- keep all records for SMSF audit purposes.
Generally, SMSFs need to action the Release Authority within the required ATO timeframe, so it is important to notify your SMSF accountant or administrator once the election is lodged.
Common mistakes to avoid
Avoid these common errors:
- paying from the SMSF before the ATO Release Authority is received;
- using the member’s personal ATO BPAY details from the Division 293 notice;
- missing the election deadline;
- selecting the wrong financial year or notice;
- failing to notify the SMSF accountant or administrator.
Should you pay personally or from super?
Paying personally preserves your super balance. Paying from super may assist with cash flow, but it reduces the amount invested in your super fund.
This decision may depend on your cash flow, super balance, retirement plans and personal circumstances. Financial advice may be required before deciding which option is best for you.
