Receiving a Div 293 notice may initially raise eyebrows, but it’s essential to recognize the positive aspect: it signifies that you’ve earned a significant income. While the notice comes with the responsibility of addressing a tax liability, there’s a silver lining. Superannuation contributions, despite being subject to additional tax, still offer a tax-efficient avenue for wealth accumulation. In this narrative, we’ll explore the calculation of Div 293 tax, the benefits of superannuation contributions, and the options available for addressing the tax liability.
Earning a Significant Income – A Positive Note
Earning a significant income is an achievement that shouldn’t be overshadowed by a Div 293 notice. It’s a testament to your professional success and financial prowess. The notice simply signals that your income has reached a level that triggers additional tax considerations.
Superannuation Contributions: A Tax-Efficient Strategy
Despite the additional tax associated with Div 293, contributing to superannuation remains a tax-efficient strategy. Super contributions are typically taxed at a lower rate than personal income tax. This means that even with the extra 15% tax on Div 293, your overall tax liability on contributions to superannuation is likely lower compared to earning the same income outside of super.
Div 293 Tax Liability Calculation
The calculation of Div 293 tax involves assessing your taxable income along with concessional super contributions. If the combined total surpasses the specified threshold, an additional 15% tax is levied on your total contributions.
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Options for Making Payments
Upon receiving a Div 293 notice, you have options for addressing the tax liability:
- Make the payment personally
- Benefits: Straightforward method.
- Consequences: May reduce the funds that you has set aside for other purposes. You may have higher interest costs if the funds have been sourced from an offset account or a loan account.
- Make the payment from your Superannuation Fund
- Benefits: means your personal cash flow is not affected.
- Consequences: Withdrawing from super will affect your superannuation balance and retirement outcomes. If you are making contributions to superannuation, paying the Div 293 tax will reduce the effect of these contributions.
The Resolution – Seeking Expert Advice
Given the intricacies of Div 293 tax and the long-term benefits of superannuation contributions, the resolution is to seek expert advice. Consulting with professionals can provide personalized insights into the most effective approach for managing your tax liability and optimizing your financial strategy.
Contact Us for Tailored Guidance
If you’ve received a Div 293 notice and want to navigate the associated tax considerations strategically, contacting us is the next step. Our team of Financial Advisors can offer tailored advice, guiding you on the best approach to manage your tax liability and maximize the benefits of superannuation.
To gain insights into your Div 293 notice and explore the most effective payment options, we invite you to contact us. Let’s work together to turn tax challenges into opportunities for strategic financial planning that aligns with your goals and aspirations.
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Disclaimer
This information is general advice. We have not considered your objectives, personal or financial circumstances. You should consider the appropriateness of the advice for your circumstances before making any decision. You should obtain and consider the relevant Product Disclosure Statement and seek the assistance of an authorised financial adviser before making any decision regarding any products or strategies mentioned in this communication.
Past performance is not an indication of future performance.
This presentation has been prepared and presented by Roger Perrett, Freshwater Wealth Management Pty Ltd CAR no.1307016, Alliance Wealth Pty Ltd AFSL No.449221. This information cannot be used or copied in whole or part without our express written consent.
While every effort has been made to ensure the accuracy of the information, it is not guaranteed. It is based on our understanding of regulations and laws as at the publication date. As these are subject to change you should talk to a professional adviser for the most up-to-date information.
To the maximum extent permitted by law, no person including Alliance Wealth Pty Ltd nor its related entities, employees or representatives accepts responsibility for any loss suffered by any person arising from reliance on this information.
