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Releasing Super to Pay Division 293 Tax

Releasing Super to Pay Division 293 Tax

  • Thursday, 13 April 2023 07:58

Individuals may receive an additional tax on their super contributions, known as Division 293 tax, if their combined income and contributions are greater than the threshold during a financial year. This threshold is currently $250,000.

The Australian Taxation Office (ATO) determine if there is a Division 293 liability once the member has lodged their tax return, and their SMSF has lodged its annual return.

The ATO has issued some guidance on the process involved for individuals who have a Division 293 tax liability and wish to release funds from superannuation to pay the tax.

Once an individual receives a Division 293 notice of assessment from the ATO they have 60 days to elect to release funds from superannuation to pay the debt. This does not impact on the due date for payment though.

There are two steps required for a SMSF to release amounts:

  • The individual member must have made an election to release money from their super, and
  • The SMSF must have received a release authority from the ATO.

The released funds are provided directly to the ATO which will apply them to pay the Division 293 liability. Any remaining amount will be offset against other debts of the taxpayer before being paid to the individual member.

If the SMSF releases funds prior to receiving a release authority from the ATO, a contravention will occur, and they may be liable for penalties. In this event the SMSF should consider submitting a voluntary disclosure form.


The ATO have recently updated the SMSF regulatory contravention disclosure form to make the signature requirements clearer and explain what to do if you are reporting a contravention that involved another trustee.

Previously, the form only needed to be signed by tax agents and other authorised contacts on behalf of the SMSF. Now all voluntary disclosure forms must be signed by at least one trustee or director of the corporate trustee to comply with tax whistle-blower laws.

The ATO no longer able to accept voluntary disclosures if they:

  • are submitted without a completed form
  • are submitted on older versions of the form
  • aren't signed by at least one trustee or director of the corporate trustee.

Submitting a voluntary disclosure is a great way to show the ATO that you take contraventions seriously and you are putting a plan in place to rectify the issue. The ATO take all voluntary disclosures into account when considering what actions should be taken when contraventions have occurred.

Let us advise you with your accounting and taxation needs!