Division 293 Tax: What Triggers It, How It's Calculated, and EOFY Planning

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

Division 293 tax is an additional 15% tax on concessional superannuation contributions for high-income earners. It was introduced in 2012-13 to reduce the tax concession for those in the top tax bracket, on the logic that a 30% tax on super contributions (15% contributions tax + 15% Division 293) is still concessional relative to the 45% top marginal rate.

Despite being well-documented, Division 293 catches people off guard every year — often because they cross the threshold due to a bonus, a large capital gain, or simply wages growth pushing them above $250,000 without them realising. And because the ATO issues Division 293 assessments separately from income tax assessments (typically 6-12 months after year-end), the bill can land long after the income was earned.

How Division 293 Works

The Threshold

Division 293 applies when your combined income and concessional super contributions exceed $250,000 in a financial year.

The $250,000 threshold has been set in legislation since 2017-18 and has not been indexed. As wages grow over time, more taxpayers cross the threshold each year — this is deliberate “bracket creep” within the Division 293 design.

What Counts as “Income” for Division 293

The Division 293 income definition is broader than taxable income:

Included:

• Taxable income (after all deductions)
• Reportable fringe benefits amounts (RFBA) — the grossed-up value of fringe benefits shown on your PAYG summary
• Reportable employer super contributions — super your employer pays above the SG rate under a salary-sacrifice or other arrangement
• Net investment losses (added back — losses from rental property or investments that reduced your taxable income)
• Tax-free government pensions and benefits (some, not all)

Not included:

• Super contributions themselves (the SG amount is not income for Division 293 — it appears in the denominator separately, not in the numerator)
• The tax-free component of any super withdrawal or pension income

What Counts as “Contributions”

The contributions side of the equation includes:

• Concessional contributions (employer SG, salary sacrifice, personal deductible contributions) — but capped at the concessional contributions cap ($30,000 in 2025-26)
• Excess concessional contributions — amounts above the cap — are not counted (they are taxed at your marginal rate and are already outside the concessional system)

The Calculation

Step 1: Calculate “income for Division 293 purposes” = Taxable income + RFBA + reportable employer super + net investment losses + certain tax-free pensions

Step 2: Add “Division 293 super contributions” = Low-rate contributions cap amount (essentially your concessional contributions, capped at the CC cap)

Step 3: Combined total = Income + Contributions

Step 4: If combined total > $250,000, the tax = 15% × the lesser of:

• (Combined total − $250,000), or
• Your Division 293 super contributions (the concessional contributions)

In plain English: the tax is 15% of every dollar above $250,000, but cannot exceed 15% of your concessional contributions. The tax is capped at 15% × your concessional cap contributions.

Worked Examples

Example 1: Employer Above Threshold Solely Through Income

Emma earns a salary of $270,000. Her employer pays SG contributions of 11.5% = $31,050.

• Income for Division 293 = $270,000 (no RFBA, no reportable super, no investment losses)
• Division 293 super contributions = $30,000 (capped at the CC cap, even though actual SG is $31,050)
• Combined total = $270,000 + $30,000 = $300,000
• Excess over $250,000 = $50,000
• Lesser of $50,000 and $30,000 = $30,000
• Division 293 tax = $30,000 × 15% = $4,500

Emma receives a Division 293 assessment from the ATO for $4,500. She can pay it from personal funds or elect to release the amount from her super account.

Example 2: Below Threshold on Income Alone, Pushed Over by Super

James earns $235,000. His employer pays SG of 11.5% = $27,025.

• Income = $235,000
• Contributions = $27,025 (below the $30,000 cap)
• Combined total = $235,000 + $27,025 = $262,025
• Excess = $12,025
• Lesser of $12,025 and $27,025 = $12,025
• Division 293 tax = $12,025 × 15% = $1,804

James’s income alone is below $250,000, but when his super contributions are added, the combined total crosses the threshold. This is the most common “surprise” scenario — people check their income and think they are safe, but the SG contributions push them over.

Example 3: Capital Gain Triggers Division 293

Priya earns $200,000. She sells an investment property, realising a $100,000 capital gain. After the 50% CGT discount, $50,000 is added to her taxable income. Taxable income = $250,000. Her employer pays SG of 11.5% = $23,000.

• Income = $250,000 + $23,000 (reportable super above SG — she salary sacrifices an additional $5,000) = assume no other adjustments
• Actually: Income for Div 293 purposes = $250,000 (no RFBA, no reportable employer super beyond SG, the SG itself is not added to income)
• Contributions (capped) = $23,000 (SG) + $5,000 (salary sacrifice) = $28,000 (below cap)
• Combined = $250,000 + $28,000 = $278,000
• Excess = $28,000
• Lesser of $28,000 and $28,000 = $28,000
• Tax = $28,000 × 15% = $4,200

The capital gain pushed Priya from $200,000 to $250,000 in taxable income — and when combined with her super, she crosses the Division 293 threshold. She was not expecting a $4,200 tax bill on top of the CGT she had already calculated.

EOFY Planning: Can You Avoid Division 293?

There is no legal “avoidance” of Division 293 — if your combined income and contributions exceed $250,000, the tax applies. But there are strategies to manage whether and to what extent it bites.

Reduce Your Income (Where Possible)

• Make personal deductible super contributions — which reduce your taxable income (and thereby your Division 293 income) but increase your Division 293 contributions by the same amount. The net effect on the Division 293 calculation is zero — it does not help and can actually make it worse if your income was below the threshold but your concessional cap contributions push the combined total over. This is counterintuitive but important: making extra concessional contributions does NOT help avoid Division 293.
• Defer deductible expenses into the Division 293 year — prepaying investment loan interest, bringing forward work-related purchases — can reduce taxable income and keep you below $250,000. But you can only defer so much.
• Salary sacrifice into super does NOT help — it reduces taxable income but increases Division 293 contributions. The combined total is unchanged.
• Negative gearing losses — investment property losses that reduce taxable income are added back for Division 293 purposes. A negatively geared property that reduces your taxable income to $240,000 does not help; the loss is added back and your Division 293 income is the pre-loss figure.

Managing the Timing

• If you are having a one-off high-income year (bonus, capital gain, redundancy payout): accept that Division 293 will apply this year. The key is to not make the situation worse by making large additional concessional contributions in the same year — those contributions will also be subject to the 15% surcharge.
• If your income oscillates around $250,000: in lower-income years (below the threshold), making additional concessional contributions is efficient because they only trigger the standard 15% contributions tax, not the additional 15% Division 293. Save extra super contributions for the years you are below the threshold.
• Carry-forward unused concessional cap: If your total super balance is below $500,000 on 30 June of the previous year, you can use unused concessional cap amounts from up to five prior years. If you are above the Division 293 threshold, using carry-forward cap increases your Division 293 contributions and therefore potentially increases the tax. Use carry-forward cap in years when you are below the threshold.

The Top-Up Trap

If your employer offers to “top up” your super to cover the Division 293 liability, that top-up is itself a concessional contribution — and is counted in next year’s Division 293 calculation. A $4,500 top-up in Year 1 reduces the pain in Year 1 but increases your Year 2 contributions by $4,500, potentially creating a Division 293 liability on the top-up amount itself. Some employers structure this as a cash bonus instead (taxable, but at least it does not create a compounding super issue).

Paying the Assessment

Division 293 tax is assessed separately from your income tax. The ATO usually issues Division 293 assessments in the months following the end of the financial year — often October to February for the preceding June year.

You have two payment options:

1. Pay from personal funds: The assessment is payable within the time stated on the notice (typically 21 days, though the ATO is flexible on instalment arrangements). If you have the cash, this is the simpler route.

2. Release from super: You can elect to have the tax paid from your super fund. The ATO issues a release authority to your fund, and the fund transfers the amount directly to the ATO. This reduces your super balance but preserves personal cash. The election is made through the same online system where you view the Division 293 notice.

For most people, releasing from super is the pragmatic choice — the tax relates to super contributions, and using super money to pay it keeps the tax burden where it belongs. However, if you are maximising your super balance (e.g., approaching retirement with a specific target balance), paying from personal funds preserves your retirement savings.

Who Is Most Affected

• Employees earning $230,000–$270,000 — where the SG contributions push the combined total across the threshold
• Individuals with one-off capital gains or large bonuses that spike income
• Those with reportable fringe benefits (car leases, salary-packaged items) — the grossed-up RFBA adds to Division 293 income
• High-income earners with negatively geared property — the losses are added back for Division 293 purposes

Record-Keeping

The ATO calculates Division 293 automatically from data reported by your employer (PAYG summaries, RFBA) and your tax return. You do not self-calculate it — you receive an assessment. Keep your PAYG summary, income statement, and super fund annual statements to verify the numbers if the assessment looks wrong. If you dispute an assessment, the ATO’s objection process applies — typically within 60 days of the notice date.

Sources

• ATO — Division 293 tax
• ATO — Division 293 tax: what it is and how to pay