Division 293 Tax Explained: The Extra Super Tax for High Earners ($250K+)

Division 293 is an additional 15% tax on superannuation contributions for high-income earners. It applies when your income plus concessional (pre-tax) super contributions exceed $250,000 per year. Normally, super contributions are taxed at a flat 15% inside your fund — much lower than the 45% marginal tax rate that high earners pay on their salary.

Division 293 adds another 15%, bringing the total super tax to 30%. This 30% rate is still lower than the 45% + 2% Medicare levy that high earners pay on regular income, so super still has a tax advantage even with Division 293.

The tax was introduced in 2012 to reduce the 'tax concession' that high-income earners receive from the flat 15% super tax rate.

About the ATO calculates your Division 293 liability based on your 'income for surcharge purposes' plus your low-tax contributed amounts (mainly concessional super contributions). The threshold is $250,000. The 15% tax applies to the lesser of: (a) your taxable concessional contributions, or (b) the amount by which your income plus contributions exceeds $250,000.

For example: if you earn $280,000 salary and your employer contributes $33,600 in super (12% SG), your total is $313,600. The excess over $250,000 is $63,600.

Division 293 tax is 15% of the lesser of $33,600 (your concessional contributions) or $63,600 (the excess). So you pay 15% × $33,600 = $5,040. If your income alone (without super) exceeds $250,000, you'll pay Division 293 on your full concessional contributions.

About the ATO issues a Division 293 tax assessment after you lodge your income tax return and your super fund reports your contributions. This typically arrives several months after the end of the financial year. You have 21 days from the date of the assessment to pay.

You've two options: 1) Pay from your personal bank account — this preserves your super balance but costs you after-tax money. 2) Release from your super fund — you can elect to have your super fund pay the tax from your account by completing a 'Division 293 release authority' with the ATO.

Most people choose to release from super since the money is already inside the fund and using personal funds doesn't provide any additional benefit. If you don't respond within 60 days, the ATO will automatically issue a release authority to your super fund.

Division 293 affects approximately 3% of taxpayers — those earning above $250,000 including super. This includes high-income employees, medical professionals, senior executives, successful business owners, and some contractors. Income for Division 293 includes: taxable income, reportable fringe benefits, total net investment losses, taxable income of a trust (if relevant), and some foreign income.

Notably, it includes salary sacrifice contributions — if you salary sacrifice into super to reduce your taxable income below $250,000, the sacrifice amount is added back for Division 293 purposes. Capital gains are included in taxable income, so a one-off capital gain (such as selling an investment property) could trigger Division 293 in a single year even if your regular income is well below $250,000.

While you can't avoid Division 293 if your income exceeds the threshold, you can optimise your approach: 1) Contribute strategically — even at the 30% tax rate (15% standard + 15% Div 293), super is still taxed less than personal income at the 45% + 2% Medicare rate. The effective 'saving' is 17% tax on contributions. 2) Use non-concessional contributions — after-tax contributions don't attract Division 293 tax.

If you've already maximised your concessional cap or want to avoid the additional 15%, non-concessional contributions (up to $120,000/year) are an alternative. 3) Time your income — if a capital gain pushes you over $250,000 in one year, consider whether you can defer the gain or spread it over two years to stay below the threshold.

4) Spouse splitting — you can split up to 85% of your concessional contributions with a spouse, reducing the amount subject to Div 293. 5) Consider investment bonds — for savings above super caps, investment bonds are taxed at 30% internally with no additional personal tax after 10 years.