What is Division 293 Tax?
Quick answer
Division 293 tax is an additional 15% tax on concessional superannuation contributions for high-income earners whose combined income and super contributions exceed $250,000, effectively bringing their contributions tax rate from 15% to 30% on the affected amount.
What Division 293 tax actually is
Division 293 tax is a surcharge on top of the standard 15% tax your super fund already pays on concessional (before-tax) contributions. For anyone who's over the threshold, that combination brings the effective tax rate on their affected contributions to 30% instead of 15%. It's been around since 2012-13, and the $250,000 threshold has stayed fixed since 2017-18, it isn't indexed to inflation, so more people drift over it each year as wages rise.
Who it applies to
You're caught by Division 293 tax if your income for surcharge purposes plus your concessional contributions for the year add up to more than $250,000. That income figure is your taxable income, plus reportable fringe benefits, net financial investment losses, net rental property losses, and any net family trust distribution tax amount. Reportable employer super contributions aren't included in that income figure itself.
For example, someone on a $230,000 salary who contributes $32,500 in concessional contributions has a combined total of $262,500, which is $12,500 over the threshold. It's worth remembering this isn't purely a "high salary" tax, your contributions count toward the threshold too, so a moderate salary plus a big catch-up contribution can tip someone over just as easily.
How it's calculated
The ATO applies 15% tax to the lesser of two amounts: the excess of your combined income and contributions over $250,000, or your total concessional contributions for the year. Excess concessional contributions above the cap itself are excluded from this calculation, they're already dealt with separately.
| Item | Amount |
|---|---|
| Taxable income | $240,000 |
| Concessional contributions | $32,500 |
| Combined total | $272,500 |
| Threshold | $250,000 |
| Excess over threshold | $22,500 |
| Lesser of excess ($22,500) vs contributions ($32,500) | $22,500 |
| Division 293 tax (15% of $22,500) | $3,375 |
That $3,375 comes on top of the $4,875 in standard 15% contributions tax the fund has already paid on the full $32,500, so this person's total contributions tax for the year is $8,250.
How it's paid
The ATO issues a separate Division 293 assessment after your tax return has been processed and your super fund's contribution data has come through, so it lands some time after your usual notice of assessment. It's due 21 days after the date on the notice. You can pay it personally from your own savings, or elect to release the amount from your super fund through ATO online services, under Super, then Manage, then Division 293 election, within 60 days of the assessment date. Choosing to release it from super doesn't push out the 21-day due date, that stays fixed either way.
Three common misconceptions
- It doesn't tax all your contributions at 30%, only the portion over the threshold is affected.
- It isn't only for people earning $250,000-plus in salary, your contributions are added to your income for the test, so a lower salary plus a large contribution can still trigger it.
- Paying the tax from your super fund is an optional election, not something that happens automatically.
Frequently asked questions
What counts as income for Division 293 surcharge purposes?
Your taxable income, plus reportable fringe benefits, net financial investment losses, net rental property losses, and any net family trust distribution tax amount. Reportable employer super contributions above the compulsory rate aren't included in this income figure, though your concessional contributions are added separately when working out the combined total.
Is Division 293 tax the same as super contributions tax?
No, they're two separate taxes. Your super fund pays the standard 15% contributions tax on your before-tax contributions automatically. Division 293 tax is a further 15% you pay personally, outside your fund, only if your combined income and contributions exceed $250,000.
What is the Division 293 tax rate?
15%, applied to the lesser of your excess over the $250,000 threshold or your total concessional contributions for the year. It's not 15% on everything you've contributed, only on the affected portion.
Can I avoid Division 293 tax by reducing my contributions?
Yes, if trimming your concessional contributions brings your combined income and contributions back under $250,000. Weigh that against the super growth and tax saving you'd be giving up though, for a lot of people it's still worth contributing and simply paying the extra 15%.
What if I have super with more than one fund?
It doesn't change anything. The ATO aggregates your concessional contributions across every fund you hold when working out whether you're over the $250,000 combined threshold.
Sources
Disclaimer
This is general information only, not financial or tax advice. Division 293 thresholds and rules can change, confirm the current figures at ato.gov.au or with a licensed tax agent or financial adviser before relying on them for a real decision.