Division 293 Tax Impact
If your income plus super contributions exceeds $250,000, you'll pay an additional 15% tax on some or all of your concessional contributions. This is Division 293 tax—and while it reduces the benefit of salary sacrifice, it doesn't eliminate it.
This scenario provides general information only and is not personal financial advice. Consider consulting a licensed financial adviser for advice tailored to your situation.
When Division 293 applies
Division 293 applies when your Division 293 income plus low-tax concessional contributions exceeds $250,000.
The tax only applies to concessional contributions that pushed you over the threshold, or all your concessional contributions if you were already above it.
What counts as Division 293 income
Division 293 income is broader than taxable income. It includes:
- Taxable income
- Reportable fringe benefits
- Total net investment losses (added back)
- Reportable super contributions
- Certain other amounts
This means you can't easily reduce your Division 293 income through negative gearing or salary sacrifice—the calculation captures most strategies that reduce taxable income.
Example: Income below vs above the threshold
Income: $230,000
Below threshold
- Salary
- $230,000
- Salary sacrifice
- $15,000
- Employer SG (12%)
- $25,800
- Division 293 income + super
- $270,800
- Division 293 tax
- $3,120
- Total contributions tax
- 15% + partial 15%
Only $20,800 (amount over $250k) attracts Division 293
Income: $280,000
Above threshold
- Salary
- $280,000
- Salary sacrifice
- $15,000
- Employer SG (12%)
- $31,800
- Division 293 income + super
- $326,800
- Division 293 tax
- $4,500
- Total contributions tax
- 30% on all
All $30,000 in concessional contributions taxed at 30%
How Division 293 changes the effective tax benefit
| Situation | Tax on $10k salary | Tax on $10k super | Benefit |
|---|---|---|---|
| Below Div 293 threshold | $4,700 (47%) | $1,500 (15%) | $3,200 saved |
| Above Div 293 threshold | $4,700 (47%) | $3,000 (30%) | $1,700 saved |
| 37% marginal rate (no Div 293) | $3,900 (39%) | $1,500 (15%) | $2,400 saved |
Even with Division 293, salary sacrifice saves tax—just not as much. The $1,700 saving on $10,000 is still meaningful, especially when compounded over time in your super fund.
How and when you pay
- You lodge your tax return
- Your super fund reports contributions to the ATO
- The ATO calculates if Division 293 applies
- You receive a Division 293 assessment (separate from your income tax assessment)
- You choose to pay from personal funds or release from super
Pay from personal funds
Pay the assessment like any other ATO debt. Your super balance stays intact.
Release from super
Elect to have your super fund pay the tax. Reduces your super balance but preserves your cash flow.
Common misunderstandings
"Division 293 makes salary sacrifice not worth it"
At 30% total contributions tax, super is still taxed less than salary at the top marginal rate (47%). The benefit is halved, not eliminated. For high earners, $1,700 saved per $10,000 contributed is still significant.
"I only pay Division 293 if my salary exceeds $250,000"
Division 293 income includes more than salary—it captures fringe benefits, investment losses (added back), and reportable super contributions. You can exceed $250,000 even with a lower salary.
"I can avoid Division 293 by reducing salary sacrifice"
If your income alone is above $250,000, all your concessional contributions (including employer SG) will attract Division 293. Reducing salary sacrifice only helps if you're near the threshold and could drop below it.
"Division 293 is deducted automatically by my employer"
Division 293 is assessed by the ATO after your tax return, not withheld by your employer. You'll receive a separate assessment and must pay or elect to release from super. Plan for this additional payment.
FAQ
What is Division 293 tax?
Division 293 is an additional 15% tax on concessional super contributions for high-income earners. It applies when your income plus concessional contributions exceeds $250,000. The tax brings the total contributions tax rate to 30% on affected contributions.
What income counts towards the Division 293 threshold?
Division 293 income includes taxable income, reportable fringe benefits, total net investment losses, reportable super contributions, and some other amounts. It's broader than taxable income alone, capturing most forms of income and tax-preferred arrangements.
Is salary sacrifice still worthwhile if Division 293 applies?
Usually yes. Even with Division 293, concessional contributions are taxed at 30%, which is still lower than the top marginal rate of 45% plus Medicare levy (47%). The tax benefit is reduced but not eliminated for high earners.
When do I pay Division 293 tax?
The ATO issues a Division 293 assessment after you lodge your tax return and your super fund reports your contributions. You can pay from your own funds or elect to release money from your super fund to pay the tax.
Check your income tax position
Estimate your income tax to understand where you sit relative to the Division 293 threshold.
Check your income tax position →