Issue Illustration
After entering the Div293 worksheet information in the Estimation section, the excess concessional contribution amount is not automatically added to the taxable income. However, the excess contribution tax offset is still applied, reducing the overall tax liability, which is incorrect behavior.
Why This Matters
The Excess Concessional Contributions are counted as personal assessable income taxed at the marginal tax rate. Learn more from the ATO
LodgeiT has a worksheet to help with concessional and non-concessional contributions tax via "Estimate"
According to the Australian Taxation Office (ATO), excess concessional contributions should be included in your assessable income. This means they need to be added to your taxable income and taxed at the appropriate rate, instead of only applying a tax offset that reduces your tax.
How to Correct the Issue
- Manually add the excess concessional contributions amount to the appropriate income field. For example, in the tax return form, enter it under Section 24: Other Income.
- Once included there, the excess contributions will be correctly assessed as income and taxed accordingly.
Additional Resources
To understand concessional contributions caps and related tax rules in detail, you can visit the official ATO page:
ATO - Concessional Contributions Caps and Tax