Div 293: When you’re too good at superannuation
If you’ve received a surprise letter from the ATO about something called “Division 293 tax,” here’s what you need to know – what it is, why it exists and what it means for you.
What is Division 293 tax?
Division 293 tax is an extra tax on super contributions for high-income earners. Normally, when your employer puts money into your super (the compulsory 11.5% Super Guarantee which is about to increase to 12% as of July 2025), it gets taxed at a nice low rate of 15%. But if you earn a lot, the government wants to even the playing field a bit.
If your income + super contributions go over a certain threshold, you’ll pay an extra 15% tax on your concessional (pre-tax) super contributions. That brings the total tax on those contributions up to 30%.
Who gets hit with Division 293?
Those with an income plus super contributions that add up to over $250,000 in a financial year. Your Division 293 income includes salary, bonuses, investment income, fringe benefits and super contributions.
How much is the Div 293 tax?
If you’re over the threshold, the extra tax is 15% — but only on the portion of your concessional contributions that push you over the $250k line.
For example:
- Your income is $240,000
- Your employer pays $27,600 into your super (Super Guarantee)
- Your total “Division 293 income” is $267,600
That means you’re $17,600 over the threshold. So you’ll pay 15% Division 293 tax on $17,600, which is $2,640.
Do you have to do anything?
The ATO usually sends you a notice (and your accountant gets one too). You’ve got options:
- Pay it yourself directly to the ATO
- Elect to have it paid from your super fund (this is called a release authority)
We can help you figure out the best option based on your cash flow and goals.
Why does Div 293 tax exist?
Basically, it’s designed to make the super system a bit more balanced. High-income earners already get more benefit from the 15% concessional tax rate, so this helps level the playing field compared to middle-income Australians.
The take away…
Division 293 tax isn’t exactly welcome news, but it means you’re earning a great salary — a good problem to have! That said, it’s worth reviewing your super contributions strategy and talking to your accountant about whether salary sacrificing or other planning moves make sense for you.
Need help navigating it all? Get in touch — we’re here to make tax just that little bit less taxing.
