Division 293 (Div. 293) tax is an additional 15% tax levied on concessional superannuation contributions made by high-income earners. It kicks in when a specially defined “income” figure exceeds $250,000 – and it catches more people than you might expect.
What is Division 293 tax?
Concessional contributions (CCs) – such as your employer’s Superannuation Guarantee payments, salary sacrifice amounts, and personal deductible contributions – are normally taxed inside your super fund at just 15%. For most Australians that’s a significant saving compared to their marginal rate.
However, the Australian Government decided that the 15% rate is too concessional for very high earners. So Div. 293 adds a second layer of 15% on the relevant contributions, bringing the effective contributions tax to 30% – still below the top marginal rate of 47%, but noticeably higher than the standard rate.
Importantly, the tax is levied on you personally, not on your super fund. You receive an assessment notice from the ATO after you lodge your tax return.
How the tax is calculated
The ATO utilizes a very broad definition of “income” to determine whether you cross the $250,000 threshold.
- Taxable income
- Reportable fringe benefits
- Net financial investment losses
- Net rental property losses
- Net family trust distribution tax amounts
- Low tax contributions (CCs within your CC cap)
- Super lump sum taxed elements at 0% rate
- Assessable First Home Super Saver released amounts
Notice what’s included in that income figure: rental losses and investment losses are added back in, which is why negative gearing provides no shelter from this tax. Similarly, salary sacrificing more into super reduces your taxable income but your CCs are captured as “low tax contributions” in the income calculation – so that doesn’t help either.
Three worked examples
The best way to understand the tax is to see it in action. These examples follow one individual, Bob, across three different income scenarios for 2025/26.
The broad income definition
One of the most misunderstood aspects of Div. 293 is its unusually wide definition of income. Unlike your regular taxable income calculation, this definition adds back losses that are normally deductible.
- Your taxable income (including salary, business income, and investment returns)
- Reportable fringe benefits from your employer
- Net financial investment losses – shares, managed funds, etc.
- Net rental property losses (negative gearing is added back)
- Family trust distributions – the net amount on which family trust distribution tax has been paid
- Low tax contributions – your concessional contributions within your CC cap
- One-off amounts: capital gains from asset sales, termination payments, super lump sums
Catch-up contributions and Div. 293
If your total super balance was below $500,000 at the prior 30 June, you may be eligible to carry forward unused concessional contribution cap amounts and make larger contributions. Be aware: Div. 293 tax applies to the full amount of your increased cap – not just the standard annual cap of $30,000 (2025/26). A large catch-up contribution in a high-income year can generate a significant Div. 293 bill.
Payment options
After you lodge your tax return, the ATO will issue a Division 293 assessment notice. Tax is payable within 21 days of the notice. You have two main choices:
Pay personally
Pay directly to the ATO via BPAY, credit or debit card, or through your myGov account.
Release from super
Elect within 60 days to release the funds from your super account. The ATO issues a release authority to your fund, which must pay within 10 days.
Defined benefit deferral
Members of defined benefit funds may defer payment until benefits become payable. Interest accrues on the deferred amount.
Can you reduce Division 293 tax?
Planning opportunities are limited, but not zero. Because the income definition is so broad, many common strategies are ineffective. Here’s what works and what doesn’t:
Charitable giving
Gifts to deductible gift recipients (DGRs), private ancillary funds, or public ancillary funds can reduce taxable income and therefore your Div. 293 income – provided the giving is genuine and appropriate for your financial situation.
Self-education expenses
Legitimate self-education expenses related to your current employment may reduce taxable income. Ensure expenses meet ATO requirements.
Salary continuance premiums (self-owned)
Premiums for income protection insurance you own personally (outside super) are generally tax-deductible and reduce your Div. 293 income base.
Tax-advantaged investment structures
Investment bonds and super (once you’ve considered the Div. 293 impact) grow in internally-taxed environments that reduce your personal taxable income over time.
Spouse contributions strategy
Where one partner faces Div. 293 tax, consider whether it’s more tax-effective for the lower-earning spouse to make concessional contributions instead. A spouse on a 39% marginal rate saves 24% on CCs vs 17% for the higher-income partner subject to Div. 293.
Negative gearing
Rental losses are added back into Div. 293 income, so negative gearing provides no reduction.
Extra salary sacrifice
While salary sacrifice reduces taxable income, those concessional contributions are included as “low tax contributions” in the Div. 293 income definition – no net benefit.
Are super contributions still worthwhile?
The answer, for most high-income earners, is yes. Here’s the comparison:
Even after paying Div. 293, there’s a 17% tax saving on each concessional contribution compared to receiving that income as salary. And once money is inside super, earnings are taxed at a maximum of 15% – compared to up to 47% if held in your personal name.
Key takeaways
This article is general information only and does not constitute personal financial or tax advice. You should seek advice from a licensed financial adviser and registered tax agent before acting on anything in this article. Information is based on legislation current as at June 2026 and is subject to change.