Division 293 Tax: What High-Income Earners in Australia Need to Know

Division 293 Tax

If you’re a high-income earner in Australia, it’s essential to understand how Division 293 Tax can impact your superannuation strategy. Introduced to ensure a fairer distribution of super tax concessions, Division 293 Tax targets individuals whose income and super contributions exceed $250,000 in a financial year. In this blog, we explain how the tax works, who it applies to, and how it’s calculated—backed with official references and practical examples.

Division 293 Tax:
What High-Income Earners in Australia Need to Know

 

What Is Division 293 Tax?

Division 293 Tax is an additional 15% tax on concessional (before-tax) superannuation contributions for individuals whose combined Division 293 income and concessional contributions exceed $250,000 in a financial year.

Since standard concessional contributions are taxed at 15%, this additional tax increases the total tax to 30% on the amount above the threshold, effectively reducing the advantage high-income earners receive from super tax concessions.

Reference: Australian Taxation Office (ATO) – Division 293 Tax

How Division 293 Tax Is Calculated

The Australian Taxation Office (ATO) calculates Division 293 Tax using two data sources:

  • Your income tax return
  • Super fund contribution reports

The 15% tax is applied to the lower of:

  • The amount by which your income plus concessional contributions exceed $250,000
  • Your taxable concessional contributions

Example:

If your total income is $260,000 and you make $20,000 in concessional contributions:

  • The excess above $250,000 is $10,000
  • Division 293 Tax = 15% of $10,000 = $1,500
Division 293 Tax
Division 293 Tax

What Income Is Counted for Division 293?

To determine if you’re over the $250,000 threshold, the ATO adds together several components to calculate your Division 293 income, including:

  • Taxable income (after deductions)
  • Reportable fringe benefits
  • Net investment or rental losses
  • Income from trusts and partnerships
  • Super lump sums taxed at 0%
  • First Home Super Saver released amounts

Some amounts—like taxed super lump sums and First Home Super Saver withdrawals—are subtracted from the total.

Important Note:

One-off income events such as bonuses, redundancy payouts, or capital gains (e.g., from selling property or shares) can push your Division 293 income above the threshold, even if you typically earn less.

Reference: Australian Taxation Office – Division 293 Income

Which Contributions Are Affected?

Division 293 Tax applies specifically to concessional super contributions, such as:

  • Employer contributions, including Super Guarantee (SG)
  • Salary-sacrificed super contributions
  • Personal deductible super contributions
  • Certain roll-over benefits from other super funds

Excess concessional contributions are excluded from Division 293 Tax, but carried-forward unused concessional cap amounts are included when determining liability.

How Do You Pay Division 293 Tax?

Once your tax return and super contributions are lodged, the ATO will issue a Division 293 Notice of Assessment. You have two payment options:

  1. Pay the tax directly from personal funds
  2. Use a release authority to pay from your superannuation account

It’s crucial to pay by the due date to avoid interest charges or penalties.

Reference: ATO – How to pay your Division 293 tax

Division 293 Tax
Division 293 Tax

Can You Avoid Division 293 Tax?

If your Division 293 income exceeds $250,000, you cannot avoid the tax.

However, with strategic financial planning, you may be able to reduce your Division 293 liability.

Some approaches include:

  • Increasing tax-deductible expenses
  • Adjusting salary packaging to reduce reportable fringe benefits
  • Timing capital gains or bonuses to minimise total income in one financial year

Consulting with a registered tax agent or financial adviser can help tailor a strategy to your personal circumstances.

Disputing a Division 293 Assessment

If you believe you’ve been incorrectly assessed, you should:

  • Verify income and super contributions on your Division 293 notice
  • Amend your tax return if there’s an error
  • Contact your super fund to correct any contribution reporting issues
  • Lodge an objection with the ATO if discrepancies remain

Reference: ATO – Correcting a Division 293 tax error

Why It Still Makes Sense to Contribute to Super

Despite the additional 15% tax, super contributions under Division 293 Tax are still taxed less than the highest marginal income tax rate of 47%.

This makes concessional contributions a tax-effective strategy for long-term retirement savings—even for high-income earners.

Division 293 Tax
Division 293 Tax

Final Thoughts

Division 293 Tax plays a role in ensuring equity in Australia’s superannuation system.

While it increases the cost of concessional contributions for high-income earners, it does not negate the long-term benefits of saving through super.

If you suspect you may be impacted, proactive planning and professional advice are the keys to managing your liability effectively.

Need help navigating Division 293 Tax? Speak with a qualified financial adviser or accountant to review your position and develop a superannuation strategy that aligns with your financial goals.

Disclaimer For External Distribution Purposes

The information contained in this publication is for general information purposes only, professional advice should be obtained before acting on any information contained herein. The receiver of this document accepts that this publication may only be distributed for the purposes previously stipulated and agreed upon at subscription. Neither the publishers nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this publication.