Division 293 tax is an extra 15% tax on concessional (before-tax) super contributions for high income earners. It applies when your income plus concessional contributions exceed $250,000 in a year, effectively reducing the tax concession on the affected contributions from 30% down to 15%.
For many Australians, superannuation is one of the most effective long-term wealth-building tools available. However, if your income exceeds certain thresholds, you may be subject to division 293 tax which reduces the concessional tax benefits of super contributions.
This tax often catches people by surprise, particularly business owners and professionals whose income fluctuates.
In this article, we explain division 293 tax, who it applies to, how it is calculated, and what steps you can take to manage its impact effectively.
What Is Division 293 Tax?
This tax is an additional 15% charged on certain concessional superannuation contributions made by high-income earners.
It is designed to reduce the tax advantage that higher-income individuals receive from super contributions compared to lower-income earners.
Instead of concessional contributions being taxed at only 15%, affected individuals may effectively pay up to 30% tax on those contributions.
Who Does This Tax Apply To?
It generally applies if your combined income and concessional contributions exceed $250,000 in a financial year.
This includes:
- taxable income
- reportable fringe benefits
- net investment losses
- concessional super contributions
Many people cross the threshold due to:
- business profits
- one-off bonuses
- capital gains
- trust distributions
- company income
This is why proactive tax planning is essential, particularly where income is not consistent year-to-year. Strategic planning earlier in the year can significantly reduce surprises, as discussed in
👉 Mid-Year Tax Planning: What to Do Now to Maximise Your EOFY Tax Outcome
What Contributions Are Affected?
Division 293 tax applies to concessional contributions, including:
- employer Super Guarantee contributions
- salary sacrifice contributions
- personal deductible super contributions
It does not apply to:
- non-concessional (after-tax) contributions
- super earnings within the fund
Understanding how contributions interact with your broader income is critical, especially for business owners with multiple income sources.
How Is Division 293 Tax Calculated?
The ATO calculates Division 293 tax as 15% of the lesser of:
- your concessional contributions, or
- the amount by which your income exceeds $250,000
The ATO will issue a Division 293 assessment notice, and you can choose to:
- pay the tax personally, or
- release funds from your super to pay it
Common Situations Where Division 293 Tax Arises
We frequently see this tax triggered in situations such as:
- trust distributions to individuals
- company directors receiving high employer contributions
- business owners with fluctuating income
- individuals receiving large one-off capital gains
This is why understanding how income flows through structures is important, particularly where trusts or companies are involved. Poor planning can also interact with other tax rules, such as those discussed in
👉 Top 5 Division 7A Loan Traps to Avoid
Can This Tax Be Reduced?
While division 293 tax cannot always be avoided, its impact can often be managed through proactive planning, including:
- reviewing the timing of income and bonuses
- managing trust distributions
- understanding super contribution strategies
- planning capital gains events
- reviewing overall structure and cash flow
Effective planning relies on strong financial visibility and systems — not last-minute decisions — as outlined in
👉 The Truth About Sales & Accounting: Why Knowing Your Numbers Is the Ultimate Business Strategy
Why Business Owners Need to Be Especially Careful
Business owners often underestimate their exposure because:
- income fluctuates
- profits may flow through trusts or companies
- super contributions are not always reviewed alongside tax planning
Separating accounts and maintaining clear financial systems helps reduce errors and surprises, as explained in
👉 The 6 Bank Accounts Every Business Owner Needs
Or watch the video:
Final Thoughts
This tax is not a penalty — but it does reduce the tax effectiveness of super contributions for higher-income earners.
The key is awareness and planning.
If your income approaches or exceeds $250,000, division 293 tax should be considered as part of your broader:
- tax planning
- superannuation strategy
- business and investment structure
Early advice almost always leads to better outcomes than reacting to an ATO notice after the fact.
What is Division 293 tax in Australia?
Division 293 tax is an additional 15% tax on concessional superannuation contributions for individuals whose income and contributions exceed $250,000 in a financial year.
How do I know if I need to pay Division 293 tax?
The ATO assesses Division 293 tax after reviewing your tax return and super contribution data. If applicable, you will receive a Division 293 assessment notice.
Can Division 293 tax be paid from my super?
Yes. You can elect to release funds from your superannuation account to pay the Division 293 tax instead of paying it personally.
Can Division 293 tax be avoided?
It cannot always be avoided, but its impact can often be reduced with proactive income, contribution, and structure planning well before the end of the financial year.
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General Advice Disclaimer: The information in this article is general in nature and does not constitute personal financial, tax, or legal advice. Your individual circumstances will determine the most appropriate approach for you. Please consult a registered tax adviser or CPA before acting on anything in this article. Liability limited by a scheme approved under Professional Standards Legislation.
This article contains general advice only and does not take into account your specific circumstances. Please speak with a qualified accountant or tax adviser before making financial decisions.
Frequently Asked Questions
What is Division 293 tax?
Division 293 is an additional 15% tax on concessional super contributions for high income earners. It applies where your combined income and concessional contributions exceed the $250,000 threshold, and it effectively halves the usual tax concession on the affected contributions.
Who has to pay Division 293 tax?
You may pay Division 293 if your income for surcharge purposes plus your concessional (before-tax) super contributions exceed $250,000 in an income year. The ATO calculates it automatically after you and your super fund lodge, and then issues you a notice of assessment.
How much is Division 293 tax?
It is an extra 15% on the concessional contributions above the $250,000 threshold. Combined with the standard 15% contributions tax, this means those contributions are effectively taxed at 30%, which is still concessional compared with the top marginal tax rate.
How do I pay Division 293 tax?
You can pay the assessment from your own funds or elect to release the amount from your super fund. High earners should factor Division 293 into their contribution planning, as it changes the after-tax value of salary sacrificing into super.
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