Shani Jayamanne

09 June 2026

Division 293 is a tax on concessional contributions for high-income earners. This tax can materially impact the net benefit of concessional contributions in your superannuation and how much tax you pay. For investors who are already diligent about salary sacrifice and concessional caps, understanding how Division 293 works is important to avoiding unwelcome surprises.

Division 293 tax is an additional 15% tax on top of the standard tax imposed on concessional super contributions. It applies to individuals whose income and concessional contributions exceed the statutory threshold of $250,000.

If you are earning enough and making material super contributions, the tax concession that you enjoy on before-tax super contributions is reduced. The effective tax rate on those contributions becomes 30% instead of 15%.

From the 2017-2018 Financial Year onwards, the threshold was set at $250,000 and is not indexed.

Your $250,000 threshold includes:

Income + concessional contributions = >$250,000, you are liable for Division 293.

If you are liable for the tax, it is paid on the lesser of:

The additional tax rate of 15% (total 30%) applies only to this taxable amount.

For example, you earn $240,000 and your concessional super contributions are $30,000. The total is $270,000, exceeding the threshold by $20,000. The lesser of your contributions ($30,000) and the excess ($20,000) is the excess.

Division 293 tax of 15% x $20,000 = $3,000.

Therefore, $3,000 of your concessional cap is taxed at 30%, and $27,000 is taxed at 15%.

Salary sacrifice is particularly attractive to those on higher marginal tax rates

Division 293 reduces the benefit for higher-income earners, effectively raising the tax on contributions to a 30% rate in the portion liable for additional tax. This reduces the incremental advantage of contributing via superannuation compared to other investment vehicles.

Importantly, the 30% remains more tax effective than the top two marginal tax rates, making superannuation an attractive place to save for retirement. A further benefit is the tax on earnings for those contributions is 15%.

However, it is worth considering potential credits or offsets for investing outside of superannuation like franking credits. If you are on the top marginal tax rate, it will reduce your tax liability on the dividend income to 15% + 2% Medicare levy.

However, if you ever choose to dispose of the asset, superannuation would be a more favourable environment for capital gains tax.

Division 293 applies to all taxpayers who meet this threshold, and not just those who meet the limit consistently. Therefore, it is important for those who expect a one-off capital gain, an unexpected redundancy payment or bonus to consider Division 293 liabilities in that Financial Year.

Once you have submitted your tax return, you will receive the Division 293 notice from the ATO. You can pay from your own funds or authorise your superfund to release the required amount to cover the liability.

Follow the steps below to understand your Division 293 strategy:

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