Superannuation is deliberately taxed lightly to encourage people to save for retirement. But the government limits how much high earners can benefit from those concessions. One of the main tools for doing so is Division 293 tax — an extra 15% charge on some super contributions for people on high incomes. If your income and concessional contributions are large, this tax can apply to you.
This guide explains what Division 293 tax is, who pays it, how it is calculated, and how it differs from the separate tax on very large super balances. It sits under our overview of how superannuation works in Australia and is closely tied to salary sacrifice and the contribution caps.
What Division 293 Tax Is
Concessional (before-tax) contributions are normally taxed at just 15% as they enter your fund — well below the marginal rate most high earners pay. Division 293 tax adds a further 15% on some of those contributions for high-income individuals, lifting the effective rate on the affected portion to 30%.
Even at 30%, this is generally still below the top marginal income tax rate, so super usually remains tax-effective for high earners. Division 293 simply trims the size of the concession rather than removing it.
Who Pays It
You may be liable for Division 293 tax if your combined income and concessional contributions exceed a threshold of around $250,000 for the year. This threshold has applied for some time; the government has flagged that thresholds of this kind are subject to review and indexation, so confirm the current figure at ato.gov.au.
The tax applies only to the portion of your concessional contributions that sits above the threshold, not your whole contribution. Concessional contributions include:
- Compulsory employer Super Guarantee contributions.
- Salary sacrifice contributions.
- Personal contributions you claim as a tax deduction.
After-tax (non-concessional) contributions are not affected.
How It Is Calculated
Division 293 is based on your “Division 293 income”, which is broader than your salary. It generally includes:
- Taxable income (salary, wages and other assessable income).
- Reportable fringe benefits.
- Net investment losses.
- Certain other components.
Your low-tax (concessional) contributions are then added. If the total exceeds the threshold, the extra 15% applies to the lesser of your concessional contributions and the amount over the threshold.
Worked Example
Suppose your Division 293 income is $240,000 and your concessional contributions are $20,000, for a combined total of $260,000. That is $10,000 over the $250,000 threshold. The extra 15% applies to that $10,000, giving an additional $1,500 in tax.
Note the mechanics: if your income alone is below the threshold but your contributions tip you over, only the excess above the threshold is taxed — not all your contributions.
Division 293 vs the $3 Million Super Tax (Division 296)
Division 293 is often confused with the newer tax on very large super balances, but they are entirely separate measures.
| Division 293 | Division 296 | |
|---|---|---|
| What it targets | High-income earners’ contributions | Very large super balances |
| Trigger | Income + concessional contributions over ~$250,000 | Total super balance over $3 million |
| Extra rate | 15% on the excess contributions | 15% on earnings for balances $3m–$10m; 25% over $10m |
| Timing | Long-standing | Law from 13 Mar 2026; applies from 1 Jul 2026 |
The newer measure, Division 296 — the $3 million super tax, adds an extra 15% on earnings attributable to the part of a balance above $3 million (and 25% above $10 million), on a realised-earnings basis. High earners can be affected by both taxes at once: Division 293 on the way in, and Division 296 later if their balance grows past $3 million. It is worth understanding both when planning contributions.
How You Pay It
Once the ATO assesses your Division 293 liability, you receive a notice and have two options:
- Pay personally from your own money, preserving your super balance.
- Release funds from super by authorising your fund to pay the tax using an ATO release authority.
Whichever you choose, respond to the notice promptly — there is generally a set window (often 60 days) to pay or lodge a release request, after which interest or penalties can apply.
Planning Considerations
- Watch the cliff-edge on contributions. Increasing salary sacrifice can push you over the threshold; weigh the 30% effective rate against your marginal rate before ramping up.
- Mind timing. A one-off spike — a large bonus or capital gain — can tip you over in a single year. Spreading deductible contributions across years, or timing them, can help.
- Super is still usually worthwhile. Even at 30%, concessional contributions are generally taxed below the top marginal rate.
- Consider both taxes together. If your balance is heading towards $3 million, factor in Division 296 as well.
Why the Tax Exists
Superannuation tax concessions are, by design, worth more to people on higher incomes. Someone on the top marginal rate saves far more tax by having a dollar taxed at 15% inside super than someone on a low marginal rate does. Division 293 was introduced to reduce this imbalance, so that the very highest earners receive a smaller — though still real — concession on their contributions. Framed this way, the tax is not a penalty but a trimming of an otherwise generous benefit, keeping super broadly equitable across income levels.
The Effective Tax Rate on Your Contributions
It helps to think in terms of the effective rate on a concessional contribution:
- Most people: contributions taxed at 15% inside the fund — a large saving against a marginal rate that may be 30% or more.
- Division 293 taxpayers: the affected portion is taxed at 30% (15% plus the extra 15%).
Even at 30%, this usually remains below the top marginal income tax rate, which is why super continues to be tax-effective for high earners. The question is rarely “should I use super at all?” but “how much should I contribute, and when?” — balancing the concession against the point at which the extra 15% kicks in.
A Note for Employers and the Self-Employed
Division 293 is assessed on the individual, but the contributions that trigger it can come from several sources. High-earning employees should remember that their compulsory Super Guarantee — now 12% of ordinary earnings — counts towards the concessional total alongside any salary sacrifice. The self-employed claiming deductions for personal contributions face the same test. In both cases, the interaction with the contribution caps matters: staying within the cap keeps the concession available, while Division 293 simply reduces its size for the highest earners.
Common Pitfalls
- Assuming it hits all your contributions. Only the portion above the threshold is taxed.
- Ignoring the ATO notice. Deadlines apply for payment or release requests.
- Confusing it with the $3m tax. They are separate and can both apply.
- Relying on a fixed threshold. Thresholds can be reviewed and indexed — check ato.gov.au.
For high earners, Division 293 is a manageable cost rather than a reason to avoid super — but it pays to understand it, and to plan contributions with the caps and Division 296 in mind.
This article is general information only and not financial or tax advice; consider your own circumstances and speak to a licensed adviser or the ATO before acting.