Super is taxed lightly to encourage you to save for retirement — concessional contributions are normally taxed at just 15% inside your fund. But once your income gets high enough, the government claws back some of that benefit through Division 293 tax. Here is who it hits and how much it costs.
What Division 293 is
Division 293 is an extra 15% tax on concessional (before-tax) super contributions for high earners. It effectively lifts the tax on those contributions from 15% to 30% — still below the top marginal rate, but less generous than the standard concession.
It applies when your income plus your concessional contributions exceeds $250,000 in a year.
How the $250,000 threshold works
The test adds your taxable income to your concessional contributions (employer super, salary sacrifice and any personal deductible contributions). If the combined figure is over $250,000, the extra 15% applies to the lesser of:
- your concessional contributions, or
- the amount you are over $250,000.
So if you are only just over the line, only a small slice is hit — not all your contributions.
A worked example
Say your taxable income is $245,000 and your employer pays $20,000 of super:
- Combined: $245,000 + $20,000 = $265,000, which is $15,000 over the threshold.
- The extra 15% applies to the lesser of your $20,000 contributions or the $15,000 excess — so $15,000.
- Extra tax: 15% × $15,000 = $2,250.
The Division 293 Calculator does this on your numbers, and the Salary Tax Calculator helps you see your income picture.
Is salary sacrifice still worth it if Division 293 applies?
Often, yes. Even at 30%, contributing to super is usually still better than taking the money as salary taxed at 47% (45% plus the 2% Medicare levy) at the top. The concession is smaller, not gone. The Super Contribution Optimiser and the Salary Sacrifice Super Calculator help you weigh it up, and you still need to watch the $30,000 concessional cap.
How you pay it
The ATO works out Division 293 after you lodge your return and sends you (or your fund) a notice. You can pay it yourself or release the money from your super to cover it.