Division 293 Tax in Australia for 2026: A Guide for High-Income Earners

Division 293 tax is an extra 15% tax on certain superannuation contributions for individuals whose income and concessional super contributions exceed a set threshold. This is in addition to the standard 15% tax that applies to concessional contributions.

The aim is to reduce the advantage that higher-income earners receive from superannuation tax concessions. For most people, concessional contributions are taxed at 15%, but for those affected by Division 293, the effective tax rate on some contributions rises to 30%.

Who Needs to Pay Division 293 Tax?

You may be liable for Division 293 tax if your total income plus concessional super contributions exceed the government’s threshold. For the 2026 financial year, the threshold remains at $250,000. If your combined income and concessional contributions are above this amount, the portion of your contributions above the threshold is subject to the additional 15% tax.

Key points:

• The threshold for 2026 is $250,000.
• The tax applies to concessional (pre-tax) super contributions, such as employer contributions, salary sacrifice, and personal deductible contributions.
• The extra 15% tax only applies to the portion of contributions above the threshold.

The calculation for Division 293 tax is based on your “Division 293 income”, which is not just your salary. It can include:

• Taxable income (including salary and wages)
• Reportable fringe benefits
• Total net investment losses
• Some other income components

To this, your concessional super contributions are added. If the total exceeds $250,000, the amount above the threshold is subject to the extra 15% tax.

Example scenario: Suppose your Division 293 income is $240,000 and your concessional super contributions are $20,000, making a total of $260,000. The extra tax applies to $10,000 (the amount above $250,000), resulting in an additional $1,500 in tax (15% of $10,000).

Important Details

• Only concessional contributions are affected (not after-tax contributions).
• If your income alone is below $250,000 but your concessional contributions push you over, only the excess is taxed.
• The tax is assessed by the Australian Taxation Office (ATO) after you lodge your tax return.

For the 2026 financial year, the $250,000 threshold for Division 293 tax remains unchanged. While there is ongoing discussion about whether this threshold should be indexed or adjusted, no changes have been announced for 2026. It’s important to note that other superannuation tax changes, such as those affecting very high super balances, are separate from Division 293 tax.

If you are close to the threshold, it’s worth reviewing your income and super contributions. Some strategies to consider include:

Reviewing Salary Sacrifice Arrangements

Increasing salary sacrifice contributions could push your total above the threshold. If you are already close to $250,000 in combined income and concessional contributions, consider the impact of additional salary sacrifice amounts.

Timing Deductible Contributions

If you expect a large bonus or capital gain, consider the timing of your contributions to avoid exceeding the threshold in a single financial year. Spreading out contributions over multiple years may help manage your exposure.

Understanding Other Taxes

Division 293 tax is separate from other taxes that may apply to superannuation, such as those on very large balances. It’s important to understand how different rules may affect your overall tax position.

Even with the extra tax, superannuation can remain a tax-effective way to save for retirement, as the combined tax rate on concessional contributions is generally still lower than the highest marginal income tax rate.

Once the ATO calculates your Division 293 tax liability, you will receive a notice of assessment. You have two main options for payment:

1. Pay personally: You can pay the tax directly from your own funds.
2. Release funds from super: You can authorise your super fund to pay the tax from your super balance using a release authority form provided by the ATO.

Many people choose to pay from their super fund, but paying personally may help preserve your retirement savings, depending on your circumstances. It’s important to respond to the ATO’s notice promptly, as there are deadlines for payment or for submitting a release request.

If you receive a Division 293 tax assessment, it’s important to act quickly. The ATO expects payment or a release request within a set timeframe (usually 60 days). Ignoring the notice can lead to penalties or interest charges.

What is the Division 293 tax threshold for 2026?

The threshold remains at $250,000 for the 2026 financial year.

Does Division 293 tax apply to all super contributions?

No, it only applies to concessional (pre-tax) contributions, such as employer contributions, salary sacrifice, and personal deductible contributions.

Can I avoid Division 293 tax?

If your income and concessional contributions exceed the threshold, the extra tax applies. However, reviewing your contributions and timing may help manage your exposure.

How do I pay Division 293 tax?

You can pay directly or authorise your super fund to release the amount from your super balance using a release authority form from the ATO.

Division 293 tax is an important consideration for high-income earners planning their superannuation and tax strategies in 2026. By understanding how the tax works, monitoring your income and contributions, and considering the timing of large payments, you can better manage your exposure. Staying informed and proactive can help you avoid unexpected tax bills and make the most of your retirement savings.