If you earn close to or above $250,000, or receive a large lump sum payment during the year, an additional tax could be quietly increasing the tax on your superannuation contributions. This is known as Division 293 tax, and it can have a significant impact on your overall super strategy if you’re not prepared.
What Is Division 293 Tax?
Division 293 tax is an additional 15% tax that applies to certain superannuation contributions when your income exceeds the $250,000 high-income threshold.
It applies to what are known as “low tax contributions”, which include:
- Employer concessional contributions (including Super Guarantee)
- Salary sacrifice contributions
- Personal contributions for which you’ve claimed a tax deduction
Normally, these contributions are taxed at 15% within your super fund. However, when Division 293 tax applies, the total tax increases to 30%, made up of:
- 15% contributions tax paid by your super fund, and
- An additional 15% Division 293 tax, assessed personally by the ATO.
How Is Division 293 Tax Calculated?
Division 293 tax is applied to the lesser of:
- Your low tax (concessional) contributions for the year, and
- The amount by which your income exceeds $250,000.
If your income on its own is below $250,000 but exceeds the threshold once concessional contributions are added, only the portion above $250,000 is subject to Division 293 tax.
Example: How Division 293 Tax Works in Practice
Sarah has a taxable income of $230,000 for the 2025–26 financial year. During the year, she receives $30,000 in concessional super contributions.
Her Division 293 income is calculated as:
- $230,000 taxable income
- plus $30,000 low tax contributions
- Total: $260,000
This exceeds the $250,000 threshold by $10,000. As a result:
- $10,000 of her contributions are subject to Division 293 tax
- Additional tax payable: $1,500 (15% of $10,000)
What Counts as Income for Division 293 Purposes?
The income definition for Division 293 tax is broader than standard taxable income. It includes:
- Taxable income (excluding First Home Super Saver released amounts)
- Reportable fringe benefits
- Amounts subject to family trust distribution tax
- Total net investment losses (including negative gearing and rental losses)
- Low tax (concessional) contributions
Because these amounts are added back, common tax-planning strategies such as negative gearing or salary sacrificing to super usually won’t reduce your exposure to Division 293 tax—even though they may lower your taxable income.
Common Traps to Watch Out For
There are several situations where Division 293 tax can apply unexpectedly:
- Lump sum payments, such as redundancy payments or unused annual or long service leave, are taxed in the year they are received. These amounts can push your income over $250,000 even if they relate to earlier years.
- If the ATO reallocates or disregards super contributions due to “special circumstances,” those contributions may still count towards the Division 293 income threshold in the year received (even if excess concessional contributions tax is avoided).
- Division 293 tax is not capped at $4,500. If you use the carry-forward concessional contribution rules and make larger contributions, the additional tax can be significantly higher.
What You Can Do
If your income is approaching or exceeding $250,000, it’s essential to factor Division 293 tax into your superannuation planning. Decisions around:
- The timing of super contributions
- Salary sacrifice arrangements
- Lump sum payments and bonuses
can all influence your exposure to this additional tax.