Refund of Division 293 Tax for Temporary Residents Permanently Leaving Australia
The Government introduced the Division 293 tax in 2012 to ensure high income earners on the 47% tax bracket are not benefiting excessively from making super contributions (which are only taxed at 15%). Prior to the introduction of the Division 293 tax every dollar a higher income earner sacrificed into super would save them 32% tax.
The Division 293 tax results in individuals with ‘income’ greater than $300,000 per annum having their concessional superannuation contributions taxed at 30% (instead of the standard 15%). The 30% tax on the super contributions is paid 15% by the super fund and 15% by the individual. The individual has the choice to pay their 15% tax from their own pocket or apply to have the funds released from their super fund.
An individual’s income for Division 293 purposes is defined as their taxable income, reportable fringe benefits, net investment losses, net rental property loss, and superannuation contributions.
Temporary residents are taxpayers who hold a temporary visa granted under the Migration Act 1958, are not Australian citizens or the holder of a permanent visa, and don’t have a spouse who is an Australian resident.
An individual is entitled to a refund of all the Division 293 tax they have paid while being in Australia if they:
- Received a Departing Australia Superannuation Payment. See Tax Tip 23.
- Applied to the Commissioner in the approved form for the refund.