Division 293 Tax Explained (2025–26): Who Pays & How It Works

Key takeaways

• Division 293 is an extra tax on some concessional super contributions.
• It applies when your income plus concessional contributions exceed $250,000.
• The extra tax is 15 percent and only applies to part of your contributions.
• Many people are caught by surprise because salary alone is not the test.

Division 293 tax is one of those rules that often shows up after the fact. You lodge your return, everything looks fine, then a notice arrives months later. Why did this happen?

This guide explains what Division 293 tax is, who pays it, how it is calculated, and what your options are once you receive a notice. No jargon. No hype. Just how it works in Australia.

If you want to sanity check your numbers first, you can use my Division 293 calculator to get a rough estimate before an assessment arrives.

What is Division 293 tax?

Division 293 tax is an additional tax on super contributions. Its purpose is to reduce the tax concession available to higher income earners.

Normally, concessional contributions are taxed at 15 percent when they enter super. Division 293 adds another 15 percent on part of those contributions if your income is high enough. The practical effect is that some of your super contributions are taxed at up to 30 percent instead of 15.

The rule exists to narrow the gap between the tax benefit received by higher income earners and those on more typical incomes. It is administered by the ATO after your tax return and super contribution data are processed.

Who pays Division 293 tax?

Division 293 applies when the following total exceeds $250,000 in a financial year:

• Your income for Division 293 purposes
• Plus your concessional super contributions

This is where many people get caught off guard. The threshold is not based on salary alone.

It can apply even if your base income is under $250,000, but a one off event pushes you over for that year. Bonuses, equity vesting, capital gains, and back payments of salary are common triggers.

If you exceed the threshold, Division 293 does not apply to all your income. It only applies to a portion of your super contributions.

How Division 293 tax is calculated

The calculation is mechanical. There is no discretion.

Here is the step by step process used by the ATO.

1. Work out your Division 293 income
   This is based on the same income calculation used for the Medicare levy surcharge, with specific additions and subtractions.

2. Add your Division 293 super contributions
   These are your concessional contributions for the year, ignoring any excess concessional contributions.

3. Compare the total to the $250,000 threshold
   If the combined amount does not exceed $250,000, Division 293 does not apply.

4. Identify the taxable amount
   This is the lower of:

   • The amount over $250,000, or
   • Your taxable super contributions

5. Apply 15 percent tax
   Division 293 tax is 15 percent of that taxable amount.

That “whichever is less” rule is critical. It is also one of the most misunderstood parts of the system.

Division 293 examples

Example 1: Just under vs just over $250,000

Sam earns $235,000 and has $15,000 of concessional contributions.

Total for Division 293 purposes is $250,000. No Division 293 tax applies.

The following year, Sam earns $240,000 and again has $15,000 of concessional contributions.

The total is $255,000. Sam is $5,000 over the threshold.

Division 293 applies to the lower of:

• $5,000 over the threshold, or
• $15,000 of taxable super contributions

The taxable amount is $5,000. The Division 293 tax payable is $750.

Example 2: One off high income year

Alex usually earns around $200,000. In one year, Alex sells an investment property and realises a capital gain.

That capital gain pushes Alex’s Division 293 income over $250,000 for that year only.

Division 293 applies for that year. It does not permanently change Alex’s tax treatment. When income falls back under the threshold, Division 293 no longer applies.

This is why Division 293 often feels unexpected. It is assessed year by year.

What income counts for Division 293 purposes?

Division 293 income is not just taxable income.

It broadly follows the Medicare levy surcharge income calculation and includes items such as:

• Taxable income after deductions
• Reportable fringe benefits
• Net investment losses
• Net rental losses
• Certain trust distribution amounts

Some amounts are added back. Others are subtracted. The detail matters.

For a plain English breakdown of what is included and why, see
Division 293 income explained

Defined benefit members and Division 293

Defined benefit members are treated differently.

Instead of actual contributions, the ATO uses notional contributions. These are based on the increase in your expected benefit over the year.

If you are in a defined benefit fund, you can still be assessed for Division 293 tax even though you cannot access those contributions. In many cases, the tax is deferred and tracked in a separate debt account.

This area is complex and highly fund specific. A high level explanation is often enough to know whether it applies to you.

For a deeper explanation, see
Division 293 for defined benefit members

How you are notified and when it is payable

Division 293 tax is not calculated when you lodge your tax return.

The ATO issues an assessment only after:

• Your tax return is processed, and
• Your super fund has reported your contributions

This is why the notice often arrives months later.

If you lodge online, the notice is usually delivered to your myGov inbox. The notice sets out:

• The income and contribution amounts used
• The taxable amount
• The due date for payment

If something looks wrong, it is usually due to reporting errors rather than the calculation itself.

Paying Division 293 tax

You have two payment options.

Paying personally

You can pay the amount from your own funds, just like any other tax bill.

This keeps your super balance intact, but it does mean finding the cash.

Paying from super

You can elect to release money from your super to pay the liability.

This requires an election, usually lodged online, within 60 days of the assessment. The election does not change the due date for payment.

Paying from super reduces your retirement balance, but it can help with cash flow.

A detailed explanation of how the election works is covered here
Paying Division 293 from super

Can you avoid Division 293 tax?

For most people, the honest answer is no.

If your income plus concessional contributions exceed $250,000, Division 293 generally applies. There is no discretion to ignore or reallocate contributions for this purpose.

There are planning levers that can influence the outcome in some cases. They often involve trade offs between current tax, super balances, and flexibility.

Those trade offs deserve a separate discussion
How to reduce Division 293 tax

Common mistakes people make

• Assuming Division 293 applies to all contributions
• Focusing only on salary and ignoring other income
• Forgetting that one off income years still count
• Assuming carried forward concessional caps avoid Division 293

The rules are blunt. Understanding them early avoids frustration later.

FAQs

What is Division 293 tax in Australia?

Division 293 tax is an additional 15 percent tax on concessional super contributions when your income plus concessional contributions exceed $250,000 in a financial year.

How is Division 293 tax calculated?

It is calculated as 15 percent of the amount above the $250,000 threshold or your taxable super contributions, whichever is lower.

Next steps

If you want to estimate how Division 293 might apply to you, a calculator can help frame the numbers before an assessment arrives.

If your situation involves variable income, defined benefits, or one off events, it is worth stepping back and looking at the full picture rather than reacting to a single notice.