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 your member has lodged their tax return, and your SMSF has lodged its annual return.
If your member has a liability the ATO will send them a Division 293 notice of assessment. One of their options is to pay it by electing to release some of their contributions from their super. Payment of this liability is the responsibility of the individual who received it and it must be paid by the due date on the assessment. Individuals have 60 days to elect to release money from super to pay the Division 293 liability however this does not change the actual due date for payment.
Your SMSF can't release any amounts until:
- your member has made an election to release money from their super, and
- your SMSF has received a release authority from us.
Once your member has made their election, the ATO will send you a release authority through your SMSF messaging provider. If you don’t have a messaging provider, you will receive a paper form.
Once you have actioned the release authority, you are required to pay the ATO the amount. The ATO will then use this amount to pay the Division 293 liability. Any remaining amount is offset against other debts before being paid to your member.
If you release funds prior to receiving a release authority, a contravention will occur and you may be liable for penalties. In this event you should consider submitting a voluntary disclosure form.
HAVE YOU APPOINTED AN AUDITOR
You need to appoint an approved SMSF auditor to audit your fund each year.
They must be appointed no later than 45 days before your SMSF annual return (SAR) is due to be lodged.
You must provide all relevant documentation to your auditor so they can perform a financial and compliance audit before you lodge. You'll need to provide their SMSF auditor number (SAN) on your annual return when you lodge.
An audit is required even if the fund will pay no tax or is in pension mode. This includes funds that have had no contributions, income or payments made in the financial year.
Your auditor must be independent and registered with the Australian Securities and Investments Commission (ASIC).
Your auditor will advise you of any contraventions of the rules. You as trustee, are responsible for rectifying any contraventions as soon as possible. If you are unable to rectify a contravention you should lodge a voluntary disclosure.