Most people meet Division 293 the same way: a notice arrives from the ATO months after the tax return is done, for a tax they had never heard of, on super they cannot touch for another twenty years.
The rule itself is simple enough. What catches people is not the rate. It is the two things almost every summary glosses over — that the threshold has not moved since 2017, and that the income it tests is not your taxable income.
What Division 293 is
Division 293 is an extra 15% tax on concessional (before-tax) super contributions for high earners. It lifts the effective tax on those contributions from 15% to 30%.
That is still below the top marginal rate, which is the point. The super concession was never removed for high earners, it was narrowed. But the tax is charged to you, not to your fund, and that difference is what turns it into an unexpected bill rather than a smaller balance.
It applies when your Division 293 income plus your taxable super contributions exceed $250,000 in a financial year.
The threshold that never moves
Division 293 started life in 2012-13 with a $300,000 threshold. From 1 July 2017 the Fair and Sustainable Superannuation reforms cut it to $250,000, and it has sat there ever since.
It is not indexed. There is no mechanism that lifts it with wages or with the CPI, the way the concessional cap or the transfer balance cap move. It is a fixed dollar figure written into the law, and it has now been fixed for nine financial years while wages have not been.
The practical consequence is that Division 293 quietly widens every year without a single announcement. A salary that sat comfortably clear of the threshold in 2017 can be over it today on nothing more than ordinary pay rises. Nobody is notified that they have joined the group — the first signal is the notice.
This matters for planning, because it means the question is not "am I a high earner" but "how close am I, and which way is my income moving". If your combined figure is within about $20,000 of the threshold, treat next year as the year it starts.
Division 293 income is not your taxable income
This is the part that produces the surprised phone calls, and most explanations skip it in four words.
The income test does not use your taxable income. It uses the same income definition as the Medicare levy surcharge, ignoring reportable super contributions. To your taxable income it adds back:
- your total reportable fringe benefits amounts
- your net financial investment loss
- your net rental property loss
- any net amount on which family trust distribution tax has been paid
and it subtracts:
- super lump sum taxed elements where the tax rate is zero
- any assessable first home super saver released amount
Read that list again if you negatively gear anything. A rental loss reduces your taxable income and is then added straight back for this test. So is a margin loan loss on a share portfolio. The strategy that lowers your income tax does nothing at all to lower your Division 293 exposure.
This is the single most common way people are caught without a pay rise: not by earning more, but by holding an investment whose loss the income test refuses to recognise.
What counts as your super contributions
The other half of the test is your taxable super contributions — broadly your concessional contributions, being employer Super Guarantee, salary sacrifice and any personal contributions you have claimed a deduction for.
One important carve-out: contributions above your concessional cap are excluded. Excess concessional contributions are already taxed separately at your marginal rate through a different mechanism, so Division 293 leaves them alone rather than taxing the same dollar twice. The 2026-27 concessional cap is $32,500.
How much you actually pay
If the combined figure clears $250,000, the extra 15% applies to the lesser of:
- your taxable super contributions, or
- the amount by which the combined figure exceeds $250,000
The "lesser of" is why crossing the threshold is not a cliff. Go over by $2,000 and you are taxed on $2,000, not on your whole year of contributions.
It taxes the lesser of two numbers
What Division 293 actually costs you
Excludes reportable super contributions
Employer super plus any salary sacrifice
| Income plus contributions | $260,000 |
|---|---|
| Amount over the $250,000 threshold | $10,000 |
| Your concessional contributions | $20,000 |
| Taxed at 15% — the lesser of those two | $10,000 |
Division 293 tax on that amount
$1,500.00
Only the amount you are over the threshold is caught, not your whole year of contributions. Crossing the line by a dollar costs 15 cents, not 15% of everything.
Division 293 income uses the Medicare levy surcharge definition and deliberately excludes reportable super contributions, which are added on the other side of the test. Run your position in the Division 293 Calculator.
Example one: just over the line
Taxable income $245,000, concessional contributions $20,000, no add-backs.
- Combined: $245,000 + $20,000 = $265,000, which is $15,000 over
- The extra 15% applies to the lesser of $20,000 and $15,000, so $15,000
- Division 293 tax: 15% × $15,000 = $2,250
Example two: the negatively geared trap
Salary $230,000, a net rental property loss of $40,000, concessional contributions $30,000.
The intuitive check says you are safe. Taxable income is $230,000 − $40,000 − the $1,000 standard deduction = $189,000, and $190,000 + $30,000 = $220,000. Comfortably under.
The actual test says otherwise:
- Division 293 income: $189,000 + $40,000 rental loss added back = $229,000
- Combined with contributions: $229,000 + $30,000 = $259,000, which is $9,000 over
- The extra 15% applies to the lesser of $30,000 and $9,000, so $9,000
- Division 293 tax: 15% × $9,000 = $1,350
Same person, same year, and the difference between the two calculations is entirely the add-back. The Division 293 Calculator runs the real test on your figures, and the Salary Tax Calculator sets out the income picture underneath it.
Is salary sacrifice still worth it?
Usually, yes — and it is worth being precise about why, because "still worth it" is doing a lot of work in most articles.
At the top marginal rate you would pay 47% on that dollar as salary, counting the 2% Medicare levy. Inside super, even with Division 293 applied, it is taxed at 30%. That is a 17 percentage point gap, and it is a gap on the way in. The money then compounds in an environment taxed at a maximum of 15% on earnings rather than at your marginal rate.
What changes is the size of the advantage, not its direction. What genuinely does change the answer is liquidity: super is preserved, so a dollar sacrificed at 45 is a dollar you cannot reach for fifteen or twenty years. That is a real cost and it is not a tax question.
The Super Contribution Optimiser and the Salary Sacrifice Super Calculator will weigh the two sides on your numbers, including the concessional cap.
How you actually pay it
The ATO works the tax out after both your tax return and your fund's contribution reporting have landed, which is why the notice often arrives well after you thought the year was closed.
You then have two options. You can pay it from your own money, or you can elect to have the amount released from your super to cover it. The release route uses a release authority, which you give to your fund, and the fund pays the ATO. The notice sets out the amount and the due date.
There is a genuine decision here rather than an obvious answer. Releasing is easier on your cash flow but permanently removes the money — and its future compounding — from the concessionally taxed environment you were trying to build. Paying from outside super keeps the balance intact. For a bill of a few thousand dollars, decades from preservation age, the compounding difference is not trivial.
Where it works differently
Two situations follow different rules and are worth flagging rather than guessing at:
Defined benefit interests. Contributions are notional rather than actual, so the amount is calculated differently, and the tax can generally be deferred and paid when the benefit is eventually taken rather than now.
Constitutionally protected funds. Certain state government schemes cannot have the tax taken from the fund, which changes how it is paid.
If either applies to you, check the specifics with the ATO or your fund rather than relying on general figures — the mechanics differ enough that a general worked example will mislead you.
Frequently Asked Questions
Not simply your taxable income. It is your taxable income plus reportable fringe benefits, net financial investment losses, net rental property losses and family trust distribution tax amounts, less certain super lump sum and first home super saver amounts. Negative gearing losses are added back, so they do not reduce your exposure.
No. It raises the tax on affected contributions from 15% to 30%, against 47% at the top marginal rate. The concession is narrower, not gone.
An extra 15% on the lesser of your taxable super contributions or the amount your combined income and contributions exceed $250,000.
No. It was reduced from $300,000 to $250,000 from 1 July 2017 and has not moved since. More people cross it each year through ordinary wage growth alone.
No. Excess concessional contributions are excluded from the Division 293 calculation, because they are already taxed at your marginal rate under separate rules.
After your return and your fund's reporting are both processed. The ATO issues a notice with the due date, and you can pay it directly or release the money from your super.
Sacrificing less reduces the contributions side of the test, so it can reduce the tax. Whether that leaves you better off is a different question — you would be moving money from a 30% environment to one taxed at your marginal rate.