Division 293 Tax: What You Need to Know

What is Division 293 Tax?

Division 293 tax is payable in addition to the standard 15% tax that is paid on concessional contributions by your super fund. This effectively increases the overall tax paid on concessional contributions to 30%.

If your income and concessional contributions exceed $250,000, you may be liable to pay this additional 15% tax on some or all of your concessional contributions. Income from a range of sources counts towards this limit, including:

• Employment and business income: Your salary, wages, and business profits.
• Investment income: Dividends, interest, trust distributions, and net capital gains.
• Reportable fringe benefits: Non-cash benefits provided by your employer.
• One-off payments: Redundancy, termination, or large capital gains from selling an asset.

Note! You do not have to be a consistently high earner to get hit with Div 293. The tax applies for that financial year only, even if your income drops back under the threshold the very next year. A one-off spike, such as selling an investment property or receiving a bonus, can be enough to trigger it.

What are Concessional Superannuation Contributions?

Concessional superannuation contributions are like a tax-deductible gift to your future self, helping you save more for retirement while reducing your taxable income now. Win-win! Concessional contributions include contributions made by an employer on behalf of an employee (including Super Guarantee contributions), and contributions made under an effective salary sacrifice arrangement. Personal contributions may also be treated as concessional contributions where you claim a personal tax deduction.

Note! The concessional contributions cap is $30,000 for the 2025–26 financial year, rising to $32,500 from 1 July 2026 as a result of indexation. It’s worth checking you’re across your total before the end of the financial year.

What are Non-Concessional Superannuation Contributions?

Non-concessional superannuation contributions are like adding extra sprinkles to your retirement savings sundae from income that you’ve already paid tax on. Because you have already paid personal tax on these funds, they are not taxed when received by your super fund.

How to Calculate Division 293 Tax

The calculation sounds complicated, but once you see it in action, it clicks pretty quickly. The tax applies to whichever is the lower of two figures:

1. Your total concessional contributions, or
2. The amount by which your combined income and contributions exceed the $250,000 threshold.

Then, a 15% rate is applied to that lower figure. Here is what that looks like in practice:

Case Study: Calculating the Div293 Tax Liability

Sam earns $240,000 in taxable income and has $25,000 in concessional super contributions made on his behalf. His combined total is:

$240,000 + $25,000 =$265,000

This puts Sam $15,000 over the $250,000 threshold.

To determine the taxable amount, we look at the lesser of:

• His total concessional contributions: $25,000
• The amount by which he exceeded the threshold: $15,000

The lesser amount is $15,000, so his Division 293 tax calculation is:

15% × $15,000 = $2,250

Notice that Sam does not pay the additional 15% on all of his contributions. It only applies to the portion that sits above the threshold. This is an important distinction that catches many high earners out.

How to Avoid Division 293 Tax

Unfortunately, there is no simple way to avoid Division 293 tax if your combined income and contributions sit above the threshold. However, you can work with a tax advisor to implement compliant tax planning strategies to manage your taxable income.

Reducing your taxable income below the $250,000 threshold, through strategies such as negative gearing, charitable donations, or restructuring your business and investment assets, can help you keep your combined total below the limit. Ultimately, even if you do trigger the tax, paying 30% tax on super contributions is still a far better financial outcome than paying tax at the top marginal rate of 47% on those same dollars.

Received a Division 293 Tax Assessment?

The ATO does not assess Division 293 tax as part of your standard personal tax return. Instead, they will issue a separate Division 293 tax assessment after your individual tax return has been lodged and your super fund has reported your contribution data.

If you receive a Division 293 assessment, do not ignore it. You have 60 days to respond. The good news is that you don't have to pay this bill out of your own pocket you can elect to have the tax paid from your superannuation account.

Paying From Super vs. Paying Personally: What is the Best Move?

Deciding whether to pay your assessment personally or release the funds from your super fund requires careful consideration:

• Paying from superannuation: This is the most convenient route as it preserves your immediate personal cash flow. However, it reduces your super balance, meaning you have less capital compounding inside the tax-effective super environment over the long term.
• Paying personally: This requires using your after-tax personal cash, but it keeps your retirement savings fully intact. If you are younger with decades of compounding growth ahead, or if you are aiming to maximise your balance up to the transfer balance cap, paying personally is often the smarter financial move.

Because every individual’s financial situation and wealth goals are different, it is highly recommended to have a quick conversation with our wealth advisors and certified financial planners before making this election.

How BlueRock Can Help

Our multidisciplinary wealth and tax teams are here to handle the entire Division 293 process on your behalf. Rather than spending your valuable time navigating clunky government portals, our advisors can:

• Manage the election process: We will prepare, lodge, and coordinate the release authorities directly with your SMSF or retail super fund to ensure strict ATO deadlines are met.
• Conduct strategic reviews: We will look at your overall financial structures to see if there are legal, advisor-approved strategies to manage your taxable income below the threshold in future years.
• Integrate with your wealth plan: We will model the long-term impact of paying from super versus paying personally to ensure your decision aligns with your retirement goals.

Don't let unexpected tax assessments catch you off guard. Submit the form below to get in touch with BlueRock's superannuation and tax experts today to get your wealth plan sorted.

Frequently Asked Questions About Division 293

What is Division 293 tax?

Division 293 tax is an additional 15% tax levied on the concessional superannuation contributions of individuals whose combined income and super contributions exceed $250,000. It effectively brings the total tax paid on concessional contributions from 15% up to 30%.

When did Division 293 tax start?

Division 293 tax was first introduced by the Australian Government in the 2012–13 financial year. It was originally introduced with a higher income threshold of $300,000, which was subsequently lowered to the current $250,000 threshold from 1 July 2017 to narrow the tax concessions available to high earners.

How do I pay my Division 293 tax assessment?

Once you receive your assessment, you can pay it personally via BPAY or credit card, or you can submit an election form to the ATO to have the funds released directly from your retail super fund or SMSF. To avoid administrative delays or penalties, this election should be handled by your tax agent.

Disclaimer: This article is intended as general information only and should not be considered as advice on any matter and should not be relied upon as such. The information in this article has been prepared without taking into account any individual objectives, financial situation or needs. You should therefore consider the appropriateness of the information in regards to these factors before acting, or seek advice before making any financial decisions.