What is Division 293 tax?
If your income and super contributions together push past $250,000, you'll pay an extra 15% tax on your concessional contributions. Here's exactly how Division 293 works, how it's calculated, and what your options are when the ATO comes knocking.
Last updated: April 2026 · ATO-Aligned Information 7 min read
In this article
- What is Division 293 tax?
- Who has to pay it?
- How it's calculated - step by step
- Worked examples
- What counts as Division 293 income?
- How and when to pay
- Interaction with carry-forward contributions
- Can you reduce or avoid it?
- Frequently asked questions
What is Division 293 tax?
Division 293 tax is an additional 15% tax on concessional (before-tax) super contributions for high-income earners. It sits on top of the standard 15% contributions tax that everyone pays when money enters their super fund - meaning affected individuals effectively pay 30% tax on some or all of their concessional contributions.
The tax was introduced to reduce the tax advantage that high-income earners receive on super contributions. Someone on a 45% marginal tax rate saves 30 cents in the dollar by contributing to super, compared to just 15 cents for someone on a 30% rate. Division 293 narrows that gap by adding 15% back on the higher earner's concessional contributions.
Even with Division 293 applying, concessional super contributions are still taxed at 30% - well below the 45% top marginal rate (47% including the Medicare Levy).
The Division 293 threshold has been fixed at $250,000 since the 2017–18 financial year and has not been indexed to inflation. As wages grow over time, more Australians will cross this threshold without any change in policy.
Who has to pay it?
Division 293 tax applies when the sum of your Division 293 income and your concessional super contributions exceeds $250,000 in a financial year. It currently affects around 3% of Australian taxpayers - primarily senior executives, medical professionals, successful business owners, and high-income contractors.
Importantly, you don't need to earn $250,000 in salary alone to be caught. One-off events can push you over the threshold in a single year even if your regular income is well below it.
One-off events that can trigger Division 293
Selling an investment property, receiving a large capital gain, a year-end bonus, a redundancy or termination payment, or a trust distribution can all push combined income and contributions over the $250,000 threshold - even if it only happens once. Division 293 may apply for that year only.
How it's calculated - step by step
The ATO calculates Division 293 tax automatically after you lodge your tax return and your super fund reports your contributions. Here is the exact process:
Calculate your Division 293 super contributions
This is the lower of: your total concessional contributions OR the concessional contributions cap for that year ($30,000 in 2025–26, or higher if using carry-forward amounts). Excess concessional contributions above the cap are excluded.
Determine your Division 293 income
This is broader than your taxable income alone. It includes taxable income, reportable employer super contributions, net investment losses, total net investment losses, and other components. See the full income definition in the section below.
Calculate the amount above the $250,000 threshold
Add your Division 293 income and your Division 293 super contributions. Subtract $250,000. The result is how far you are over the threshold.
Determine the taxable amount
The taxable super contributions are the lower of: the excess amount over $250,000, OR your total Division 293 super contributions. This is a critical step - if your income alone exceeds $250,000, the entire concessional contribution amount becomes taxable.
Apply the 15% tax rate
Multiply the taxable super contributions by 15%. This is your Division 293 tax liability for the year.
Worked examples
Example 1 - Partially over the threshold
David - $240,000 income, $20,000 in super contributions
| Step | Calculation | Amount |
|---|---|---|
| Div 293 income + contributions | $240,000 + $20,000 | $260,000 |
| Amount above threshold | $260,000 − $250,000 | $10,000 |
| Taxable contributions (lower of $10,000 excess or $20,000 contributions) | min($10,000, $20,000) | $10,000 |
| Division 293 tax payable | $10,000 × 15% | $1,500 |
Because David is only $10,000 over the threshold, the taxable contributions are capped at $10,000 - not the full $20,000 he contributed.
Example 2 - Well over the threshold
Sarah - $280,000 income, $33,600 in super contributions
| Step | Calculation | Amount |
|---|---|---|
| Div 293 income + contributions | $280,000 + $33,600 | $313,600 |
| Amount above threshold | $313,600 − $250,000 | $63,600 |
| Taxable contributions (lower of $63,600 excess or $33,600 contributions) | min($63,600, $33,600) | $33,600 |
| Division 293 tax payable | $33,600 × 15% | $5,040 |
Because the excess ($63,600) is greater than the total contributions ($33,600), Division 293 applies to the full contribution amount - Sarah pays 15% on every dollar she contributed.
What counts as Division 293 income?
The definition of income used for Division 293 is broader than your standard taxable income. This is one of the most misunderstood aspects of the tax, and it's why some people are caught off guard. Division 293 income includes:
- Taxable income (salary, wages, business income, rental income)
- Reportable employer super contributions (salary sacrifice amounts shown on your payment summary)
- Total net investment losses (losses from rental properties or investments added back)
- Fringe benefits (reportable fringe benefit amounts from your employer)
- Trust distributions and partnership income
- Capital gains (including from the sale of investment properties or shares)
Why salary sacrifice doesn't help
A common misconception is that salary sacrificing more into super will reduce your Division 293 income. It won't. Reportable employer super contributions - which include salary sacrifice - are added back into the Div 293 income calculation. The extra contributions also increase the contribution side of the equation. In most cases, salary sacrificing more does not reduce your Division 293 liability.
How and when to pay
The ATO issues a Division 293 notice of assessment after it has received both your income tax return and contribution information from your super fund. This typically arrives several months after the end of the financial year. If you lodge via myTax, the notice will appear in your myGov inbox.
Once you receive the notice, you have two options for payment:
| Payment method | How it works | Best for |
|---|---|---|
| Pay personally | Pay the ATO directly from your personal bank account, just like any other tax bill. Your super balance remains untouched. | Those closer to retirement who want to maximise their super balance growing in a tax-effective environment. |
| Release from super | Elect to have your super fund pay the liability on your behalf via a release authority from the ATO. Reduces your super balance by the tax amount. | Those who prefer not to use personal cash, or who are younger and less focused on preserving every dollar in super. |
Important: Payment deadlines
You have 60 days from the date of the Division 293 notice to elect to pay from your super fund. If you do not respond within this window, the ATO will automatically issue a release authority to your super fund. If you prefer to pay personally, act promptly to ensure the election is made correctly.
Interaction with carry-forward contributions
If you use the carry-forward rule to contribute more than the standard annual concessional cap, those additional amounts are fully counted in the Division 293 calculation. There is no special treatment or exclusion for carry-forward contributions - the ATO treats all concessional contributions within your cap (including any carry-forward top-up) as part of your Division 293 super contribution amount.
This means that if you are close to the $250,000 threshold, making a large catch-up contribution in a single year could push your combined total over it - and result in a Division 293 bill you hadn't anticipated. It's an important consideration when planning to use carry-forward amounts.
Planning tip
If your income sits below but close to the $250,000 threshold, consider spreading carry-forward contributions across multiple years rather than using them all at once. This may allow you to boost super significantly while keeping Division 293 exposure to a minimum.
Can you reduce or avoid it?
There are limited planning opportunities to reduce Division 293 tax because of the broad definition of income used in the calculation. However, some strategies are worth being aware of:
- Timing contributions: If you have control over when income is received (for example, a business owner or contractor), timing concessional contributions into a year when your income is lower can reduce or eliminate the liability.
- Spouse contributions: Contributing to a lower-income spouse's super rather than your own can build household super savings without triggering Division 293 on those amounts.
- Non-concessional contributions: Switching from concessional to non-concessional (after-tax) contributions avoids the Division 293 calculation entirely - but you forgo the upfront tax deduction.
- Spreading carry-forward use: As noted above, using carry-forward amounts across multiple years rather than in one lump sum may reduce exposure.
It is worth noting that even with Division 293 applying, concessional super contributions are still taxed at an effective rate of 30% - significantly below the 45% top marginal rate. For most high-income earners, super contributions remain one of the most tax-effective strategies available.
Frequently asked questions
Does Division 293 apply to employer SG contributions?
Yes. Employer Superannuation Guarantee contributions are concessional contributions and are included in the Division 293 super contribution calculation. At the current SG rate of 12%, someone earning $250,000 in salary would have $30,000 in employer contributions alone - meaning their combined total would be $280,000 and the full $30,000 in contributions would be subject to Division 293 tax.
It's worth underseatnding why. The word "concessional" referse to the tax 'concession' you get when money goes into super - instead of being taxed at your marginal tax rate, contributions are taxed at just 15%. For most Aussies that's a meaningful saving, but for soemone on a 45% marginal rate, the concession is far more generous. Division 293 exists specifically to claw back some of that advantage, bringing the effective tax rate on contributions closer to 30% - which is what a middle-income earner effectively gets taxed at.
Will I always pay Division 293 if my income is over $250,000?
Not necessarily. Division 293 applies when your income plus your concessional contributions exceed $250,000. If your income is exactly $250,000 with no concessional contributions, the threshold is not crossed. However, once employer SG contributions are factored in, most individuals earning $220,000 or more will be over the threshold.
I only crossed the threshold because of a one-off capital gain. Do I still have to pay?
Yes. The ATO has no discretion to waive Division 293 tax based on the nature of the income. If your combined income and contributions exceed $250,000 in a year - regardless of whether it's from salary, a capital gain, a bonus, or a trust distribution - the tax applies for that year. The ATO does not have the same flexibility it has with excess contributions.
What happens with defined benefit fund members?
Different rules apply. For defined benefit fund members, the Division 293 tax is assessed but payment is deferred until super benefits are actually paid from the fund. The ATO maintains a deferred debt account, and interest accrues annually at the 10-year Treasury bond rate (4.29% for 2024–25).
Is Division 293 tax deductible?
No. Division 293 tax is not deductible against your income, regardless of whether you pay it personally or from your super fund.
Does the $250,000 threshold ever change?
It hasn't since 2017. The threshold was reduced from $300,000 to $250,000 in the 2017–18 financial year and has not been indexed to inflation since. This means that more Australians will be caught by Division 293 over time as wages grow, even without any change in government policy.
Is it better to pay from super or personally?
There is no universally correct answer. Paying personally preserves your super balance, allowing that money to continue growing in a tax-effective environment. Paying from super avoids dipping into personal savings. For those closer to retirement with a larger super balance, paying personally is often preferred. For younger individuals or those with limited personal cash, releasing from super is often more practical. Speak to a financial adviser for guidance specific to your situation.
Professional advice recommended
Division 293 tax interacts with your overall income, concessional contributions strategy, carry-forward amounts, and super balance. A registered financial adviser and tax agent can model your specific situation and help you determine the most tax-effective approach - particularly in years where you may be close to the threshold.
General information only. This article provides general information about Australian superannuation and tax rules and does not constitute financial product advice. It does not take into account your personal objectives, financial situation or needs. Tax rules are complex and subject to change.
