Ideas Tax Knowledge Blog

Superannuation Guarantee Amnesty (7) – Contributions Made Under the SG Amnesty (2)

Written by Ideas Group | Jun 9, 2020 2:10:20 AM

 

 

 

 

 

 

Contributions made under the SG amnesty will not cause/increase a Division 293 tax liability

Under the SG amnesty, contributions made won't trigger or increase Division 293 tax liability for employees. Division 293 tax applies when an individual's income for surcharge purposes plus their low tax contributions exceed $250,000. Low tax contributions include concessional contributions except excess ones.

To prevent Division 293 tax liability from SG amnesty contributions:

  1. Contributions made by the Commissioner or the employer under the SG amnesty, to offset SGC liability, are excluded from an individual's low tax contribution amounts if the employer qualified for the amnesty (new S.293-30(4)(c) and (d) of the ITAA 1997).

  2. This exclusion ensures SG amnesty contributions don't trigger Division 293 tax or increase it for other low tax contribution amounts.

For example:

Tom's income for Division 293 tax is $240,000, including low tax contributions of $21,000. In June 2020, Tom's employer makes a $60,000 contribution under the SG amnesty to offset their SGC liability. Without the exclusion, Tom's income would increase to $300,000, triggering Division 293 tax liability of $7,500. But since the contribution is under the SG amnesty, it won't be a low tax contribution, keeping Tom's income below the $250,000 threshold.

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