Division 293 tax

[coolcup69]

I am hoping someone on this forum might be able to point me in the right direction...

I have two super funds. Fund A is an SMSF which has the majority of my super. Fund B is my employer super which has a very small balance. Fund B has my life and salary continuance insurance in it. My monthly contributions are split such that a larger amount goes to Fund A for investment and a smaller amount goes to Fund B to just cover my insurance premiums.

I recently received a D293 tax assessment for Fund B. I know I can ask Fund B to pay the tax for me, but the balance in Fund B is very minimal (to just cover the insurance) and I would not want it to drop further. Is it possible for Fund A to pay the tax even though it is in relation to the contributions to Fund B?

If I can pay the tax from Fund A, is there any special paperwork I need to do or prepare?

 

[Paul@PFI]

I quite concerned for people who have a SMSF then beg for free guidance on strategy.

Div 293 has zero to do with a SMSF, Its something that applies to ALL taxpayers. All funds. All taxpayers potentially.

The Div 293 notice explains the options in plain english. It includes a notice that permits the taxpayer to choose the fund to seek release of funds from.

 

[coolcup69]

Hi Paul

Thanks for your response. I formed the same view myself after reading the documents but just wanted to confirm in case my understanding was incorrect. I don't think my question was "begging" for "free guidance on strategy", rather it was a question on compliance and making sure I wasn't missing anything in the documentation.

Given this is a forum, I assume it is appropriate to ask questions and look for views from others that may be knowledgeable in the area. If you don't want to give "free" advice, as you call it, then simply don't respond. How do you think it makes me feel when you use words like "beg". Very classy of you.

My question was simply one regarding compliance and if you confuse that with "strategy" then I feel very sorry for your clients.

Anyway, thank you for your response, it has assisted me in confirming my own view based on the research I have done.

 

[Paul@PFI]

The bit that surprised me relates to the Notice and not understanding it. Instructions are clear. I'm happy to explain this to clients. Its a benefit of engaging a tax professional. Items 10-14 on the notice ask the member to nominate the name of the fund, Acct Number and the amount to be released. You provide the form to the fund by completing Section A. The fund then completed Section B. ATO Form NAT 74521 accompanies the release and explains all of this.

The instructions are clear that you can also release from MORE THAN ONE FUND and the taxpayer completes that choice.

There are strategies around 293 Tax - One that many get wrong is thinking they can personally pay the tax (ATO issues a personal assessment notice after all) to avoid release from the super. Or they seek to release 100% of the excess amount and alter the form. Or they reduce it and release less than 85%. Had a new client approach me who did that. ATO hit them with a huge penalty.

 

[coolcup69]

There are strategies around 293 Tax - One that many get wrong is thinking they can personally pay the tax (ATO issues a personal assessment notice after all) to avoid release from the super.

This page from the ATO website seems to contradict what you are saying:
https://www.ato.gov.au/Tax-professi...etail/Practical-tips/Paying-Division-293-tax/

At the top of the page, it states that clients can pay the tax personally "out of their own monies". Maybe I am missing what you are saying though