Division 293 Tax Explained — $250,000 Threshold for 2025-26 & 2026-27 (ATO)
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Primary tax-year context: 2025-26
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General information only. This is not tax or financial advice. Consult a licensed financial adviser or registered tax agent for advice specific to your situation.
If your combined income and concessional super contributions top $250,000 in a financial year, you pay an extra 15% tax on the concessional contributions that push you over the line. That’s Division 293 — a stealth surcharge that applies on top of the standard 15% contributions tax, bringing the effective tax inside super to 30% for the portion caught by the rule.
The threshold hasn’t moved since 1 July 2017. With the 47% top marginal rate (including Medicare levy), salary sacrifice is still worth doing at Div 293 levels — just not by as much as people assume. This article walks through who pays, how the ATO calculates it, a worked example at $300k salary, and how to decide whether to keep sacrificing or stop.
Who Pays Division 293 in 2025-26
You’re caught if, for 2025-26:
Division 293 income + low-tax concessional contributions > $250,000.
“Division 293 income” is not the same as taxable income. The ATO adds back several items:
- Taxable income (after allowable deductions)
- Reportable fringe benefits (the grossed-up amount on your payment summary / STP)
- Net investment losses (rental losses, financial-asset losses)
- Reportable super contributions (your voluntary salary sacrifice, if not already included elsewhere)
“Low-tax concessional contributions” are the contributions that went into super at the 15% rate — SG, salary sacrifice, and personal deductible contributions you claimed. Excess concessional contributions are not included (they’re already taxed at your marginal rate).
If the sum is over $250,000, Division 293 applies to the lesser of:
- Your concessional contributions for the year; or
- The amount by which your income-plus-contributions exceeds $250,000.
Worked Example — $300k Salary With 12% SG Plus Salary Sacrifice
Meet Sam. In 2025-26 Sam earns a salary of $285,000, receives SG at 12%, and salary-sacrifices an additional $15,000 into super. Sam has no investment losses and no reportable fringe benefits.
| Item | Amount |
|---|---|
| Salary (taxable income after sacrifice) | $270,000 |
| SG on $285k at 12% | $34,200 |
| Salary sacrifice | $15,000 |
| Total concessional contributions | $49,200 (exceeds $30k cap — see note) |
Note: Sam’s concessional contributions ($49,200) exceed the 2025-26 cap of $30,000. Without carry-forward headroom, $19,200 is excess concessional, taxed at Sam’s marginal rate plus an interest charge — and that excess is not subject to Division 293. Let’s assume Sam has $25,000 of unused carry-forward available, making the full $49,200 concessional and subject to Div 293.
Division 293 income + contributions:
$270,000 (taxable income) + $49,200 (concessional contributions) = $319,200
Excess over $250,000: $69,200
Lesser of contributions ($49,200) or excess ($69,200): $49,200
Division 293 tax: $49,200 × 15% = $7,380
That’s on top of the standard 15% contributions tax of $7,380 that was already deducted inside the fund — so the $49,200 is effectively taxed at 30% going in.
Is Salary Sacrifice Still Worth It at Div 293 Rates?
Short answer: yes, usually. Here’s the comparison for Sam’s $15,000 voluntary salary-sacrifice portion only (the SG would happen anyway):
| Route | Tax on $15,000 | Amount kept |
|---|---|---|
| Take as cash (47% top marginal rate) | $7,050 | $7,950 |
| Salary sacrifice, no Div 293 (15% contributions tax) | $2,250 | $12,750 |
| Salary sacrifice, with Div 293 (15% + 15% = 30%) | $4,500 | $10,500 |
Even with Division 293 hitting, salary sacrifice leaves $2,550 more in super than taking the money as cash — a 17% arbitrage gone to the worker’s retirement instead of the ATO’s consolidated revenue. The break-even point is when your marginal rate equals 30% (including Medicare), which none of the top brackets reach.
The gap narrows once you factor in:
- Preservation age: you can’t touch the money until 60 (or later for some cohorts).
- Future tax rules: Division 296 adds another 15% on earnings above a $3m total super balance starting from a legislated date currently under review in 2026.
- Investment returns: the 15% arbitrage still gets compounded inside super at concessional rates, which usually outperforms post-tax retail investments over 10+ years.
Model your situation on the super contribution optimiser or the salary sacrifice calculator.
How the ATO Actually Charges You
Division 293 tax is assessed by the ATO after you lodge your tax return, not at the fund. You’ll receive a separate Division 293 assessment notice — typically 2–4 weeks after your notice of assessment for the underlying return.
You then have two choices:
- Pay from personal funds — due 21 days from the assessment date (or whatever the notice states).
- Release from super — lodge a Division 293 release authority with the ATO authorising your fund to pay the bill directly. The fund sends the money to the ATO, which then applies it to the Div 293 debt.
Most people release from super because the money is already going into super at a 30% rate — paying the 15% surcharge from outside super would be paying tax with post-tax dollars. The release authority option has a 60-day lodgement deadline from the assessment date.
Defined-benefit members have modified rules: Division 293 on “defined benefit contributions” is deferred until a benefit is paid, recorded as a debt against the member account.
Five Common Div 293 Pitfalls
Pitfall 1 — Bonus year pushes you over. Someone on $220k base salary with a $40k bonus suddenly crosses $250k. SG + salary sacrifice that was efficient in a normal year now triggers Div 293 on the top slice.
Pitfall 2 — Investment property negatively geared adds to D293 income. Net rental loss is added back for Div 293 purposes — so someone who ran a $15k rental loss on a $240k salary gets counted at $255k and pays Div 293 on everything over $250k.
Pitfall 3 — Reportable fringe benefits count. Novated lease with a grossed-up amount of $22k on someone earning $240k base? That’s reportable. Div 293 income is $262k.
Pitfall 4 — Low-tax contributions vs total concessional. Excess concessional contributions aren’t in the Div 293 base (they’re taxed at your marginal rate already). Don’t double-count them when estimating the bill.
Pitfall 5 — Carry-forward makes the Div 293 base bigger. Using carry-forward to deposit an $80k catch-up contribution in a single year adds that $80k to your Div 293 base. It can still be worth doing — 30% tax on the way into super beats 47% on the way out as cash — but run the numbers before committing.
Frequently asked questions
Q: Is the $250,000 threshold indexed? No. The threshold has been fixed at $250,000 since the current Division 293 design took effect on 1 July 2017. Bracket creep is a feature, not a bug — the Treasury’s 2023 costing assumed the threshold stays static.
Q: Does Division 293 apply to employer SG I can’t control? Yes. SG is a concessional contribution and is included in the Div 293 base. You can’t opt out of SG, so high earners who dislike the surcharge can only reduce it by reducing voluntary salary sacrifice.
Q: What happens if I’m exactly at $250,000? No Div 293. The charge applies only to the portion above $250,000.
Q: Can I pay Div 293 from a self-managed super fund? Yes, but the SMSF trustee must comply with the release authority within 7 days of receipt and report the payment correctly. Get the paperwork right — non-compliance is a serious trustee breach.
Q: Does the 15% rate change with the government’s proposed $3m super tax? Division 293 and Division 296 are separate rules. Div 293 is front-end (on contributions going in); Div 296 is back-end (on earnings from very large balances). You can be hit by both in the same year if you’re a high earner with a large super balance.
Sources
- ATO — Division 293 tax
- ATO — Key superannuation rates and thresholds (Div 293 threshold, concessional caps)
- ATO — Division 293 release authorities
- Tax Laws Amendment (Fairer Taxation of Excess Concessional Contributions) Act 2013
- Income Tax Assessment Act 1997, Division 293
Check if Division 293 will hit you in 2025-26
Run your numbers on the super contribution optimiser to see how Div 293 changes the trade-off, or the salary sacrifice calculator to model different sacrifice levels. If you’re near the $250k line, a $5,000 adjustment to your sacrifice can be the difference between 15% tax and 30% tax on your concessional contributions.