Division 293 Tax Explained: Extra Super Tax for High Income Earners

Heads up — Division 293 is an additional 15% tax on concessional (pre-tax) super contributions for individuals whose combined income and concessional super contributions exceed $250,000. Standard concessional contributions are taxed at 15% inside the super fund.

Division 293 effectively doubles this to 30%, bringing it closer to the top marginal tax rate. The rationale is that high-income earners receive a disproportionate tax benefit from the concessional 15% super rate — someone on a 45% marginal rate saves 30 cents per dollar contributed to super, while someone on the 30% rate saves only 15 cents. Division 293 reduces this gap.

The tax applies to the lesser of your taxable concessional contributions or the amount by which your income plus contributions exceeds $250,000. Even with Division 293, super contributions are still taxed at 30% — lower than the 47% top marginal rate (including Medicare levy), so there's still a tax benefit to contributing.

The Division 293 income threshold is $250,000. Your Division 293 income includes taxable income, reportable fringe benefits, total net investment losses, and taxable concessional super contributions.

If this total exceeds $250,000, Division 293 applies. The tax is 15% of the lesser of: your taxable concessional contributions, or the amount by which your combined income exceeds $250,000. For example, if your taxable income is $260,000 and your concessional super contributions are $30,000 (total $290,000, exceeding threshold by $40,000), Division 293 applies to $30,000 (the lesser amount).

This bit matters. The additional tax is 15% of $30,000 = $4,500. If your income is $245,000 and contributions are $30,000 (total $275,000, exceeding by $25,000), the tax applies to $25,000. Additional tax: 15% of $25,000 = $3,750.

The ATO issues a Division 293 assessment after you lodge your tax return. You will receive a notice showing the amount owing and your payment options.

You can pay the assessment from your personal funds within 21 days of the notice, or you can elect to have it paid from your super fund by lodging a release authority with the ATO. Most people choose to pay from super, as it avoids reducing their personal cash flow. If you elect to pay from super, the ATO sends a release authority to your super fund, which deducts the amount from your balance.

This reduces your super balance but preserves your take-home pay. The Division 293 assessment typically arrives several months after you lodge your return, so plan accordingly. If you expect to be liable, consider setting aside funds or planning for the super deduction when reviewing your retirement projections. That catches a lot of people off guard.

While you can't avoid Division 293 if your income exceeds $250,000, there are strategies to manage its impact. First, remember that even with the additional 15% tax, concessional super contributions are still taxed at 30% total — lower than the 47% top marginal rate.

Don't skip this part. The net tax saving is still 17 cents per dollar, so salary sacrificing into super remains beneficial. Second, consider making non-concessional (after-tax) contributions instead of or in addition to concessional contributions. Non-concessional contributions don't attract Division 293 or the 15% contributions tax — they go into super completely tax-free.

The non-concessional cap is $120,000 per year (or $360,000 using the bring-forward rule), provided your total super balance is below $1.9 million. Third, if you've a spouse earning below $250,000, contributing to their super via spouse contributions or splitting concessional contributions can be more tax-effective.

Use our Division 293 Calculator to determine whether you're liable for Division 293 tax and estimate the amount payable. Enter your taxable income, reportable fringe benefits, net investment losses, and concessional super contributions to get an instant assessment.

The calculator also shows the net tax benefit of contributing to super even after Division 293, helping you decide whether to continue salary sacrificing or redirect contributions to non-concessional or alternative investments. For comprehensive retirement planning that accounts for Division 293, combine this tool with our Salary Sacrifice Calculator and Retirement Calculator. If your income fluctuates around the $250,000 threshold, strategic timing of income and contributions can help minimise Division 293 exposure.