Additional tax on super contributions for high income earners

The government has recently passed legislation confirming the 2012 Federal Budget announcement to collect additional tax on the super contributions for high income earners.  If you have a total income over $300,000 you now have to pay 30% tax on your concessional superannuation contributions for the 2012/13 financial year.

What you need to know

An additional tax of 15% will apply to concessional super contributions for individuals who have a total income over $300,000. This, added to the normal contribution tax of 15%, means that your concessional contributions are now taxed at 30%. (Concessional super contributions include your employer or tax deductible personal contributions and certain other super contributions and roll overs.)

This additional tax applies to concessional super contributions made from 1 July 2012.  The ATO has announced that it will be issuing to individuals (who have lodged their returns), notice of assessments for the additional tax in February 2014.

Notices of Assessment

The assessment of the additional tax will be based on information contained in the personal income tax returns lodged and the super contributions information lodged by super funds.

The notice of assessment will state:

  • Total earnings for tax assessment purposes
  • Contributions
  • The tax liability that is payable (15% of contributions)
  • The due date for payment

Amended Notices of Assessments

If you make contributions to more than one super fund, you may receive an amended notice of assessment. The timing of an amended assessment will depend on when:

  • You lodged your tax return
  • Your super fund(s) lodge its information with the ATO

Payment of the Tax

The ATO has outlined the following regarding payment of the additional tax:

  • You will be responsible for paying your tax liability.
  • The due date for the payment will be 21 days from the date of issue of the notice of assessment.
  • However, you can choose to have your superfund pay the tax by completing the necessary forms and lodging it with your fund.

How is the tax liability calculated?

You will be liable for the additional tax if your total income exceeds $300,000. The amounts that are counted towards your total income are your:

  • Taxable income (as per your tax return)
  • Concessional superannuation contributions
  • Total reportable fringe benefits
  • Net financial investment loss
  • Net rental property loss
  • Amounts on which family trust distributions tax has been paid
  • Certain other super contributions and roll overs

Once your total income exceeds $300,000 your super contributions will be charged the additional tax.

The calculation of the additional tax can be complicated, particularly where your total income is only just above $300,000, so please contact this office for assistance.

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