Division 293 tax is an additional 15% levy on concessional (before-tax) superannuation contributions for Australian taxpayers whose combined income and super contributions exceed $250,000 in a financial year. It effectively raises the tax rate on those contributions from 15% to 30% for the portion caught by the rule.

What is Division 293 tax?

Division 293 is part of the Income Tax Assessment Act 1997 and targets high-income earners to ensure superannuation tax concessions are not disproportionately benefiting those on very high incomes.

• It applies when your Division 293 income plus your low-taxed (concessional) super contributions exceed $250,000 in a financial year.
• The extra tax is 15% applied to the lesser of:
  • Your total concessional contributions for the year; or
  • The amount by which your income plus contributions exceed $250,000.

This means not all your concessional contributions are necessarily taxed at the higher rate—only the amount that falls within the “excess” zone, capped by your total contributions.

Who needs to pay Division 293 tax?

You may be liable for Division 293 tax if:

• Your adjusted taxable income (including reportable fringe benefits, reportable employer super contributions, and certain net investment losses) plus your concessional super contributions exceed $250,000.
• You make concessional contributions such as:
  • Employer Superannuation Guarantee (SG) contributions
  • Salary sacrifice contributions
  • Personal deductible contributions claimed as a tax deduction

The threshold has been frozen at $250,000 since 2017, meaning more taxpayers are caught over time due to wage growth and increased concessional caps.

How Division 293 tax is calculated

The ATO uses a “lesser-of” rule to determine the taxable amount.

Step-by-step calculation

1. Work out your Division 293 income
   This includes taxable income, reportable fringe benefits, reportable employer super contributions, and certain deductions for net investment losses.
2. Add your concessional super contributions
   These are contributions taxed at 15% within your super fund (not non-concessional/after-tax contributions).
3. Compare the total to the $250,000 threshold
   If the combined amount does not exceed $250,000, Division 293 does not apply.
4. Identify the taxable amount
   This is the lower of:
   • The amount over $250,000; or
   • Your total concessional contributions.
5. Apply 15% tax
   Division 293 tax = 15% × taxable amount.

Example calculation

• Taxable income: $240,000
• Concessional contributions: $27,500
• Combined total: $267,500
• Excess over threshold: $17,500
• Taxable amount: Lesser of $27,500 (contributions) and $17,500 (excess) = $17,500
• Division 293 tax: $17,500 × 15% = $2,625

Payment options and ATO notices

If you’re liable, the ATO will issue a Division 293 assessment after processing your tax return.

You can pay the tax:

• From personal funds (outside super); or
• By releasing money from your super fund using a release authority issued by the ATO.

Paying from personal funds preserves your retirement savings but may impact cash flow. Releasing from super reduces your balance but avoids out-of-pocket expense.

Planning strategies to manage Division 293

While you can’t avoid Division 293 if you’re over the threshold, you can plan to minimise its impact:

• Monitor income and contributions throughout the year to stay under $250,000 if possible.
• Time concessional contributions across financial years to avoid breaching the threshold in a single year.
• Consider non-concessional contributions (after-tax) which are not subject to Division 293.
• Use carry-forward concessional caps carefully, as large catch-up contributions can push you over the threshold unexpectedly.

Key takeaways

• Division 293 tax adds 15% to the tax on concessional super contributions for high-income earners.
• The $250,000 threshold is based on income plus concessional contributions, not income alone.
• Only the lesser of your contributions or the excess over $250,000 is taxed at the higher rate.
• Proactive planning can help manage or reduce your Division 293 liability.

For personalised advice, consult a qualified tax adviser or financial planner familiar with superannuation and high-income tax planning.