Div 293 Tax: The Extra Super Tax High Earners Pay
Div 293 tax adds an extra 15% to super contributions for high earners in Australia. Learn who pays it, how it is calculated, and if it is still worth it.
By Timothy Hirou GaschereauPublished 10 min read
You have worked hard, your income has climbed, and now the ATO has a new label for you: a high-income earner. Congratulations, genuinely. But with that milestone comes a tax you may not have heard of: Division 293 tax (or “div 293 tax” in every Reddit thread and accountant's office in the country).
It is not a penalty or a gotcha. It is simply the government making sure the tax break on super contributions does not get disproportionately generous for very high incomes. If your combined income and concessional super contributions are approaching or over $250,000, this is for you. It is general information only, not tax advice, so check the ATO and a registered tax agent.
🎯 The essential: Div 293 is an extra 15% tax on concessional (before-tax) super contributions for high earners, so those contributions are effectively taxed at 30% instead of 15%. It triggers when your income for surcharge purposes PLUS your concessional contributions exceeds $250,000, and it only hits the slice over that line. You can pay it yourself or release it from super. Even at 30%, salary sacrificing usually still beats a 47% marginal rate.
What Division 293 tax actually is
Division 293 is an additional 15% tax on concessional (before-tax) super contributions for high-income earners, on top of the standard 15% contributions tax every fund already deducts. If you are caught, your concessional contributions are effectively taxed at 30% total instead of 15%. It applies only to concessional contributions (employer super guarantee, salary sacrifice, and personal contributions you claim as a deduction), not your whole balance or your investment earnings, and not non-concessional (after-tax) contributions.
Who pays it: the $250,000 threshold
Div 293 applies when your “income for surcharge purposes” plus your concessional contributions exceeds $250,000 for the year. The income definition is broad: roughly your taxable income, plus reportable fringe benefits, net financial investment and rental losses added back, and your reportable/concessional super contributions.
Your concessional contributions themselves count toward the $250,000 test. So a $225,000 salary plus $30,000 of concessional contributions gets you to $255,000 and into scope, even though your pay alone is under the line. The $250,000 threshold has been stable since 2017-18.
How it is calculated: the “lesser of” rule
The extra 15% does not hit all your contributions automatically. It applies to the lesser of: (a) your total concessional contributions, or (b) the amount by which your combined income plus contributions exceeds $250,000. If you only just cross the line, only a small slice is hit.
| Step | Well over ($260k + $30k) | Just over ($225k + $30k) |
|---|---|---|
| Combined total | $290,000 | $255,000 |
| Amount over $250,000 | $40,000 | $5,000 |
| Lesser of contributions vs excess | $30,000 | $5,000 |
| Div 293 tax (15%) | $4,500 | $750 |
Same $30,000 of contributions, but the person just over the threshold pays $750, not $4,500.
How you pay it
The ATO calculates your liability automatically after you lodge, then issues a Division 293 assessment (a formal notice). You then choose:
- Pay from your own money, like any other tax bill, direct to the ATO.
- Release the amount from your super fund using a release authority: the fund pays the ATO, but your super balance drops by that amount.
If you want your super compounding at full speed, paying from your own pocket preserves every dollar inside the fund. You lodge the election through ATO online services, or your tax agent handles it.
Is salary sacrificing still worth it with Div 293?
This is the question that fills the r/AusFinance comments, and it is fair. The short answer: yes, for most people, salary sacrificing within the cap is still tax-effective even with Div 293, just less so than for lower earners. Even at an effective 30%, you are paying less than the top marginal rate of 47% (45% plus the 2% Medicare levy). The saving is roughly 17 cents in the dollar instead of 32, smaller but still real.
For the mechanics of contributing, see our guide to salary sacrifice and the concessional cap. This is general information, not personal advice: a registered tax agent or adviser can model your exact numbers.
One-off triggers: when Div 293 can surprise you
Div 293 is not just for people who earn $250,000 every year. A single big income event can catch someone who is not usually a high earner:
- Selling an investment property at a large capital gain, or a big parcel of shares.
- A large bonus or commission payment.
- A termination or redundancy payment that lifts income for the year.
If you expect one of these, it is worth modelling your combined income plus concessional contributions before 30 June, and talking to a registered tax agent about your options.
SnowLetter
Fresh snow in your inbox once a week: Australia's money news, quick tips, and our best reads.
❓ Frequently asked questions
What is Division 293 tax?
+
Division 293 tax is an extra 15% tax on concessional (before-tax) super contributions for high-income earners in Australia. It sits on top of the standard 15% contributions tax, bringing the effective rate on affected contributions to 30%. The ATO works it out automatically after you lodge your tax return.
What is the Division 293 income threshold?
+
The threshold is $250,000, measured as your income for surcharge purposes plus your concessional super contributions for the year. It has been unchanged since 2017-18, but always check the ATO for the current figure.
How much is Division 293 tax?
+
It is 15% of the lesser of: your total concessional contributions, or the amount by which your combined income and contributions exceed $250,000. So if you only just cross the threshold, only a small slice of your contributions is taxed at the extra rate.
Is salary sacrifice still worth it if I pay Division 293?
+
Generally yes. Even with Div 293, concessional contributions are taxed at 30%, still well below the top marginal rate of 47% (45% plus the 2% Medicare levy). The saving is smaller (around 17 cents in the dollar rather than 32), but it is still a genuine saving for most high earners. Get advice for your situation.
How do I pay Division 293 tax?
+
After you lodge, the ATO issues a Division 293 assessment. You can pay it from your own money like any tax bill, or elect to release the amount from your super fund using a release authority. Paying from your own pocket preserves your super balance.
Can a one-off capital gain trigger Division 293?
+
Yes. A large capital gain, such as from selling an investment property or a big parcel of shares, counts toward your income for surcharge purposes. If it pushes your combined income and concessional contributions over $250,000 for that year, Div 293 applies, even if you are not usually a high earner.
Keep reading
📚 Recommended reading
The Barefoot Investor
Scott Pape
The Barefoot Investor
Scott Pape
Australia's best-selling money book ever. A simple system for accounts, budgeting, debt and a real emergency fund in one.
Making Money Made Simple
Noel Whittaker
Making Money Made Simple
Noel Whittaker
Australia's classic, comprehensive money guide covering tax, super and investing, updated for today.
Sort Your Money Out and Get Invested
Glen James
Sort Your Money Out and Get Invested
Glen James
From the host of the my millennial money podcast, a step-by-step Aussie plan to fix your spending, clear debt and actually start investing. Practical and refreshingly free of finance-bro nonsense.
Some links above are affiliate links. If you buy through them, Snowball Invest may earn a small commission at no extra cost to you. We only recommend books we'd suggest anyway.
Sources
This article is general information only, not tax or financial advice. Div 293 rules, thresholds and the concessional cap are set by the ATO and can change. Check the ATO or a registered tax agent for guidance specific to your situation.
Was this article useful?
General information only. This article is educational and does not constitute personal financial advice. It does not account for your circumstances. Consider your own situation and seek advice from a licensed adviser before acting. Read our full disclaimer.
Timothy Hirou Gaschereau
Founder of Snowball Invest, not a financial adviser.
I write about what I'm learning myself, because nobody ever taught us how to take control of our own money. It's a skill, not a mystery, and it's never too late to learn it. The best day to start was yesterday, the second best is today.
LinkedIn →Related articles
Family Tax Benefit Explained (Part A, Part B and How to Claim)
Confused by Family Tax Benefit in Australia? Learn what FTB Part A and Part B are, who qualifies, and how to avoid a Centrelink debt.
Tax Return Deadline in Australia: Key Dates and Late Penalties
Miss the tax return deadline in Australia and penalties can follow. Learn the key dates, the tax-agent extension, and what to do if you are late.
Sole Trader Tax in Australia: How Much Will You Actually Pay?
There is no special sole trader tax rate in Australia: your profit is taxed at personal marginal rates. Here is how it works, plus GST, deductions and a tax buffer.