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Division 293 Tax Explained
How the high‑income super tax works — and why concessional contributions can still be worthwhile
Division 293 is an additional 15% tax that can apply to some or all of your concessional (before‑tax) contributions when your income is high. It reduces (but usually does not eliminate) the tax benefit of contributing to super.
This page explains what triggers Division 293, how the tax is calculated, and the key planning issues to watch — especially if you're salary sacrificing, making personal deductible contributions, or receiving large employer contributions.
What is Division 293?
The concept
A “top‑up” tax on concessional contributions
Most concessional contributions are taxed at 15% in the fund.
If Division 293 applies, an additional 15% is charged by the ATO on the relevant amount.
Effective total tax (if Div 293 applies): 30%
When it applies
Based on a combined threshold
Division 293 is assessed when:
- Your income for surcharge purposes plus
- Your low‑tax contributions (generally, concessional contributions)
exceeds $250,000.
How much is taxed?
Whichever is lower
Division 293 is calculated on the lesser of:
- your concessional contributions (low‑tax contributions), and
- the amount your combined total exceeds the threshold.
Div 293 rate: 15%
Practical takeaway: Division 293 does not automatically apply to every concessional contribution you make — it depends on the relationship between your combined total and the threshold for that year.
What counts in the calculation?
1) Income for surcharge purposes (high-level)
The ATO uses a specific measure called income for surcharge purposes. It starts with taxable income and then adds certain items (for example, reportable fringe benefits and net investment losses), depending on your circumstances.
Important: This is not always the same as your “taxable income”. A person can have taxable income below the threshold but still exceed it after the surcharge‑income adjustments and concessional contributions are added.
2) Low‑tax contributions (generally concessional contributions)
Low‑tax contributions are broadly your concessional contributions taxed concessionally in the fund (commonly including employer SG, salary sacrifice, and personal deductible contributions), with special rules for defined benefit interests.
Common trap: Employer Super Guarantee (SG) is generally not reportable as an employer super contribution on your income statement — but it is still typically part of your concessional contributions and therefore can be part of the Division 293 calculation.
Worked example (simplified)
This example is intentionally simplified to show the mechanics. Your actual calculation may differ depending on your tax return components and ATO adjustments.
Example: high income + employer contributions
- Income for surcharge purposes: $245,000
- Concessional contributions (low‑tax contributions): $30,000
- Div 293 threshold: $250,000
- Combined total = $245,000 + $30,000 = $275,000
- Amount over threshold = $275,000 − $250,000
- Div 293 taxable amount = lesser of $30,000 and the amount over threshold
- Div 293 tax = 15% × (Div 293 taxable amount)
Your assessment notice will show the final calculation and the amount (if any) you can elect to release from super to pay it.
Is it still worth making concessional contributions?
| Your top marginal rate (plus Medicare levy) | Tax inside super (no Div 293) | Tax inside super (with Div 293) | Indicative tax benefit |
|---|---|---|---|
| 39% (37% + 2%) | 15% | 30% | Usually still favourable, but depends on whether Div 293 applies and on how much of the contribution is captured. |
| 47% (45% + 2%) | 15% | 30% | Even with Div 293, the effective tax can still be lower than 47% (plus super earnings remain concessionally taxed). |
Reality check: The decision is not only about upfront tax. You also weigh cash‑flow, preservation rules, potential future withdrawal tax (if under 60), estate planning, and the investment/tax environment inside super.
Planning levers for clients near (or over) the threshold
Use catch‑up concessional caps (if eligible)
If your Total Super Balance was below $500,000 at 30 June last year, you may be able to use unused concessional caps from the past five years.
Manage timing and “lumpy” income years
Bonuses, large capital gains, redundancy payouts, or business events can push you over the threshold. Modelling the year‑by‑year result helps decide whether to contribute now or spread contributions over multiple years.
Balance the household strategy
Where relevant, use spouse contributions and contribution splitting to manage household super balances and thresholds (noting that Division 293 is assessed per person).
How do you pay Division 293?
If the ATO issues a Division 293 assessment, you can generally:
- Pay the amount personally; or
- Elect to release an amount from your super fund (the ATO issues a release authority to your fund after your election).
Tip: Always check the due date on the ATO notice. The election window and the payment due date are not the same thing in every case.
Where to next?
If you are doing planning close to the Division 293 threshold, these pages are usually the next step.
Accuracy Note: Whilst every effort has been made to provide current and accurate information, I am only one person and there's a very good chance that I'll miss something. If you spot a factual error, or if a calculator breaks or gives incorrect answers, I'd be really grateful if you could let me know via the Contact Us page so I can fix it ASAP.
It would speed up the correction process enormously if you could cite for me the title of the page where you find the error and describe what the error is. Thanks heaps for your support in keeping this valuable resource up to date for everyone's benefit.
Want Help Modelling Division 293 and Contribution Options?
Division 293 doesn’t mean “don’t contribute” — it means “model the outcome”. If you want help mapping the best approach for your circumstances, choose the path that fits.