High-income Australians face an additional superannuation tax that often flies under the radar until it lands in your inbox: Division 293 tax. Designed to make the super system fairer, this tax targets those whose income and super contributions exceed certain thresholds. As we step into 2025, recent policy tweaks and indexation changes make it essential to understand how Division 293 tax could impact your take-home pay and retirement savings.
What Is Division 293 Tax and Who Pays It?
Division 293 tax is an extra 15% tax on concessional (pre-tax) super contributions for individuals whose combined income and super contributions exceed a government-set threshold. Its purpose is to even the playing field, as tax concessions on super are more valuable for those on higher incomes.
- 2025 threshold: $250,000 (unchanged since 2017, but under ongoing policy review)
- Applies to: Salary, superannuation contributions, fringe benefits, and some investment income
- Tax rate: 15% (on top of the standard 15% concessional contributions tax)
If your combined income and pre-tax super contributions are over $250,000, the portion of your contributions above this threshold is hit with the extra tax.
How Is Division 293 Tax Calculated?
The calculation can be confusing, especially as your income may include more than just your salary. The ATO uses your “Division 293 income” (which adds back things like fringe benefits and investment losses) plus your concessional super contributions.
Example: Sarah earns a salary of $220,000 and receives $21,000 in employer super contributions. Her Division 293 income is $241,000, and her total is $262,000. She’ll pay an extra 15% tax on the $12,000 that exceeds the $250,000 threshold—meaning $1,800 in additional tax.
It’s important to note:
- Division 293 tax only applies to concessional contributions (employer SG, salary sacrifice, and personal deductible contributions)
- If your income without super is below $250,000, but your concessional contributions push you above it, only the excess is taxed
- The tax is assessed by the ATO after your tax return is lodged, and you’ll receive a notice of assessment
2025 Updates: Policy Watch and Planning Opportunities
While the $250,000 threshold remains for 2025, there’s ongoing debate in Canberra about whether it should be indexed or lowered to help fund other super reforms. The government has also floated broader super tax changes, including a new cap on total super balances above $3 million, but this is separate from Division 293 tax and does not alter its calculation.
For high-income earners, planning is key. Here are some smart moves to consider:
- Review salary sacrifice arrangements: Salary sacrificing more into super could tip you into Division 293 territory.
- Time deductible contributions: If a large bonus or capital gain is expected, spreading contributions across financial years may help you avoid the threshold.
- Be aware of other taxes: Division 293 is separate from the new Division 296 tax (which applies to earnings on super balances above $3 million from 2025–26).
Even with the extra tax, super can remain a tax-effective way to save for retirement, as the combined 30% rate is still below the top marginal rate for most high earners.
How to Pay Division 293 Tax
Once the ATO calculates your liability, you’ll receive a notice with the amount due. You can choose to pay this tax personally or release the funds from your super account using a Division 293 tax release authority form. Many opt to pay from super, but paying personally could preserve more of your retirement balance in the long run, depending on your cash flow.
If you receive a Division 293 assessment, don’t ignore it—the ATO will expect prompt payment or a release request within 60 days.
Conclusion
Division 293 tax remains a key consideration for high-income earners mapping out their super and tax strategy in 2025. Staying on top of your income, monitoring contributions, and considering the timing of large payments can help you manage or minimise your exposure. As the super landscape evolves, being proactive is the best defence against unexpected tax bills.