Division 293 tax — what high earners actually pay

What Division 293 actually is

Normally concessional contributions (SG, salary sacrifice, personal deductible) are taxed at 15% inside your super fund. Division 293 is an extra 15% tax on the portion of those contributions belonging to high-income earners — bringing their effective contributions tax to 30%. The policy rationale is that at the top marginal rate (45% + 2% Medicare = 47%), a 15% rate is a very large concession; Div 293 halves that gap.

Who it applies to

You pay Division 293 tax if your "Division 293 income" for the year is over $250,000. The threshold has been $250,000 since 1 July 2017 and isn't indexed — so it catches more people every year as wages rise.

"Division 293 income" isn't just your salary

The ATO adds five things together:

1. Your taxable income (salary + other taxed income)
2. Total reportable fringe benefits amount (from your PAYG summary)
3. Net financial investment loss (e.g. negatively geared shares)
4. Net rental property loss
5. Low-tax contributions (your concessional contributions up to the cap)

It then subtracts any assessable First Home Super Saver released amount. The reason the ATO bundles investment losses back in is so negative gearing can't be used to duck the threshold.

How much you pay

The taxable amount is the lesser of:

• The amount your Division 293 income exceeds $250,000, and
• Your low-tax contributions (i.e. the concessional contributions that went into super)

Tax on that amount is 15%.

A worked example

Priya has a taxable income of $260,000, reportable fringe of $4,000, no investment losses, and $28,000 of concessional contributions. Her Division 293 income is $260k + $4k + $28k = $292,000. Excess over threshold: $42,000. Low-tax contributions: $28,000. Taxable: the lesser = $28,000. Tax: $28,000 × 15% = $4,200.

Tom has a taxable income of $245,000 and $15,000 concessional contributions. Div 293 income $260,000. Excess over threshold: $10,000. Low-tax contributions: $15,000. Taxable: $10,000. Tax: $1,500. Only the portion pushed over the threshold by contributions gets hit.

Our Div 293 calculator runs these numbers automatically.

How the bill arrives

1. You lodge your tax return normally.
2. Your super fund reports your concessional contributions to the ATO via an APRA/USI reporting system.
3. If Division 293 applies, the ATO issues you a notice of assessment — Division 293 tax, typically a few months after your tax assessment.
4. You can pay it from your own bank account, or elect to release up to the full amount from your super fund to cover the bill — by completing a release authority.

Most people release from super: it's cheaper than the net rate of interest on cash savings and the release isn't taxed further. Releasing doesn't count as a withdrawal for preservation-age purposes.

Is salary sacrificing still worth it when Div 293 applies?

Usually, yes. Your marginal rate at that income level is 47%. Contributions are taxed 15% + 15% = 30% inside super. That's still a 17 percentage point saving on every dollar you sacrifice. Over 10+ years that saving compounds considerably more than the taxable alternative, even ignoring the tax-advantaged earnings environment inside super.

Where the maths breaks down is if your contribution pushes you over the concessional cap — then excess contributions are taxed at your marginal rate less offset, erasing the benefit. Never over-contribute; use the cap tracker.

Spouse contribution splitting as a workaround

If you're regularly Division 293-taxed and your spouse has a lower Total Super Balance, you can split up to 85% of your concessional contributions after they've been made. The split happens between funds but after the 15% contributions tax, so Division 293 still applies on your original amount. It doesn't reduce the Div 293 bill — but it does even out your household super balances, which has its own benefits (second tax-free pension when you retire, more transfer balance cap available, lower risk of one partner hitting the $1.9M non-concessional cut-off).

The one-minute version

• Extra 15% on concessional contributions when Division 293 income > $250,000.
• Taxable = lesser of excess over threshold, or your low-tax contributions.
• Bill arrives after your tax assessment — release from super to pay it.
• Salary sacrifice is usually still worth it, just with a smaller tax saving.
• Use our calculator for the exact number.