If your income and super contributions together sit above $250,000, you might already be paying an extra 15% tax on your super without realising it. Division 293 tax hits high-income earners whose combined income and concessional contributions exceed that threshold, as the Australian Taxation Office (ATO guidance) explains.

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Threshold (2024‑25): $250,000 ·
Additional tax rate: 15% ·
Introduced: 1 July 2012 ·
Original threshold (2012‑2017): $300,000 ·
Indexation: None

Quick snapshot

1Who Pays
2Tax Rate
3Payment Options
4Avoidance

Five key facts, one takeaway: the threshold is fixed, the tax is certain, and only contribution management can limit exposure.

Field Value
Threshold $250,000 (2024‑25)
Tax Rate 15%
Introduced 1 July 2012
Indexed No
Assessment Annual after tax return lodgment

Who has to pay Division 293 tax?

The answer depends on your combined income and concessional super contributions. The ATO (official threshold page) states that Division 293 tax applies when your combined income and concessional contributions exceed $250,000. Concessional contributions include employer super guarantee contributions, salary sacrifice amounts, and deductible personal contributions (ATO list of included contributions).

What is the income threshold for Division 293 tax?

  • The threshold is $250,000 for 2024‑25 (ATO rates page).
  • It was reduced from $300,000 on 1 July 2017 (Pitcher Partners timeline).
  • The tax is 15% on the lesser of the excess over $250,000 or total concessional contributions (ATO calculation method).
Bottom line: If your combined income and contributions exceed $250k, you owe 15% extra on the contributions portion that pushes you over. High earners with standard employer contributions can still be caught.

The implication: a $250,000 income plus $30,000 in contributions triggers the tax even if the contributions are below the cap.

Is Division 293 tax the same as excess contributions tax?

No, they are separate taxes that can overlap. Excess contributions tax applies when you exceed the concessional contributions cap ($30,000 for 2024‑25, Hudson Financial Planning summary). Division 293 tax applies regardless of cap compliance once your combined income is high enough.

What is excess contributions tax?

  • Charged on contributions above the concessional cap at your marginal tax rate plus an excess charge.
  • Division 293 tax applies even if you stay within the cap (Pitcher Partners comparison).
  • Both can apply in the same year, creating a tax bill that can exceed 30% on contributions.

Three distinctions, one pattern: Division 293 is income‑based, excess contributions is cap‑based, and they can stack.

Feature Division 293 tax Excess contributions tax
Trigger Combined income + contributions > $250k Contributions > concessional cap
Rate 15% on excess Marginal rate + excess charge
Can both apply? Yes Yes
Example Income $280k + $30k contributions = $60k excess → $4,500 tax $35k contributions, $5k above cap → additional income tax

The trade‑off: even compliant contributors can face Division 293 if their income is high enough, making it a stealth tax on high earners with normal super arrangements.

Is there a way to avoid Division 293 tax?

No legal avoidance exists. The only reliable method is to reduce your concessional contributions or lower your income (SuperGuide analysis). Adjusting salary sacrifice or employer contributions may help, but paying the tax from super or personally does not constitute avoidance (ATO payment options).

Can I reduce my concessional contributions to avoid Division 293 tax?

  • Yes, reducing contributions lowers the taxable amount, but it also reduces your retirement savings.
  • For example, if your income is $260k and contributions are $30k, cutting contributions to $20k keeps combined total at $280k – still over $250k, so only the excess shrinks.
  • One‑off events like bonuses or capital gains can push you over regardless (SuperGuide warning).
The paradox

Reducing contributions to dodge the tax means less super growth. For a high earner with 20 years to retirement, the lost compounding may outweigh the 15% tax saved.

The catch: avoidance is essentially impossible; the choice is whether to pay from super or from personal funds.

What happens if I don’t pay Division 293 tax?

The ATO will issue a notice of assessment with a due date. Late payment incurs interest and penalties (ATO compliance section). However, you can elect to release the amount from your super account.

Can I pay Division 293 tax from my superannuation account?

  • Yes, by lodging a release election with the ATO (Russell Investments fact sheet).
  • The release reduces your super balance but avoids personal cash flow strain.
  • Elections must be made within 60 days of the assessment notice.
  1. Receive your Division 293 notice of assessment from the ATO.
  2. Decide to pay personally (via myGov or tax return) or release from super.
  3. If releasing, complete the online election through myGov before the due date.
  4. Ensure the release amount is paid to the ATO by the super fund.

What this means: paying from super preserves your pre‑tax cash flow but permanently reduces your retirement balance by the tax amount.

How is Division 293 tax calculated?

The formula is straightforward: 15% × the lesser of (combined income + contributions – $250,000) OR (total concessional contributions). Let’s walk through an example.

What is an example of Division 293 tax calculation?

  • Income $280,000 + concessional contributions $30,000 = $310,000 combined.
  • Excess over $250,000 = $60,000.
  • Taxable contributions = $30,000 (the lesser amount).
  • Division 293 tax = 15% × $30,000 = $4,500 (Mercer Super example).

Another scenario: income $245,000 + $26,950 SG + $550 salary sacrifice = $272,500 combined. Excess = $22,500, tax = 15% × $22,500 = $3,375 (Mercer Super worked example).

Keep an eye on indexation

The concessional contributions cap is indexed, but the Division 293 threshold is not. Over time, more people will be caught as incomes rise and the threshold stays at $250,000.

The pattern: even modest employer contributions can trigger the tax when your income is close to the threshold.

Timeline: how Division 293 tax evolved

Three key dates mark the evolution of this tax, each reflecting a policy shift that broadened its reach.

Date Event
1 July 2012 Division 293 tax introduced with $300,000 threshold (Pitcher Partners)
1 July 2017 Threshold reduced to $250,000 (Pitcher Partners)
2024‑25 Threshold still $250,000, no indexation (ATO current rates)

Why this matters: the real‑world threshold has fallen by 17% in nominal terms since 2017, and without indexation it will continue to bite more earners each year.

What’s known — and what’s still unclear

Confirmed facts

  • $250,000 threshold (2024‑25) (ATO)
  • 15% additional tax rate (ATO)
  • Introduced 1 July 2012 (Pitcher Partners)
  • No indexation (ATO)

What’s unclear

  • Future threshold changes — no legislation currently
  • Potential legislative amendments after the 2025 election
  • How carry-forward contribution rules interact with Division 293 in practice across multiple years
  • Whether the super guarantee increase to 12% will push more earners over the fixed threshold

The uncertainty: unless Parliament acts, more Australians will be swept into this tax each year.

Expert perspectives

“Division 293 tax is an additional 15% tax on certain concessional superannuation contributions for people whose combined income and concessional contributions exceed the Division 293 threshold.”

— Australian Taxation Office (official definition)

“Carry‑forward concessional contributions can increase the concessional contributions limit if the member’s total superannuation balance was under $500,000 at the end of the previous year.”

— Russell Investments (fact sheet on super tax)

“If concessional contributions have been reduced by excess concessional contributions, those excess amounts are disregarded for Division 293 calculations.”

— ATO (technical adjustment rule)

What this means: the ATO and industry experts agree that the tax is structural, not avoidable, and that understanding the interaction between caps and thresholds is critical for planning.

Weighing the pros and cons of Division 293 tax

Upsides

  • Targets high earners to limit super tax concessions (Pitcher Partners rationale)
  • Tax can be paid from super, avoiding personal cash flow pressure

Downsides

  • Reduces retirement savings if paid from super
  • Threshold not indexed – gradually catches more earners
  • No legal avoidance; adds complexity to tax planning
  • Can combine with excess contributions tax for a big bill

The trade‑off: it levels the super playing field but creates a nasty surprise for earners just above the threshold.

Additional sources

russellinvestments.com, unisuper.com.au

For a detailed explanation of how Division 293 tax works, check out the Division 293 tax explained article.

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Frequently asked questions

Can I claim a credit for Division 293 tax?

No, Division 293 tax is a non‑refundable tax on super contributions and cannot be claimed as a credit elsewhere. It is separate from income tax.

Does Division 293 tax apply to defined benefit schemes?

Yes, it applies to notional contributions from defined benefit schemes, calculated by the fund and reported to the ATO.

How do I report Division 293 tax on my tax return?

The ATO automatically calculates it after you lodge your tax return. You don’t need to manually report it; you’ll receive a separate notice of assessment.

What is the difference between Division 293 tax and the Medicare levy surcharge?

The Medicare levy surcharge (MLS) is an income‑based penalty for not having private hospital cover, while Division 293 is an additional tax on super contributions. They are unrelated and have different thresholds.

Can I withdraw my super to pay Division 293 tax every year?

Yes, you can elect to release super each year you receive a Division 293 assessment. There is no limit on annual releases for this purpose, but repeated withdrawals reduce your retirement balance.

Is Division 293 tax deductible?

No, it is not deductible. It is an additional tax on super contributions and cannot be claimed as a deduction in your personal tax return.

For Australian high earners, the decision is clear: pay the tax from personal funds to preserve super growth, or use a super release to ease cash flow. Either way, understanding the threshold and planning contributions each year is essential to avoid surprises. Read our guide on Single Parent Payment 2026 or Compound Interest Formula for more financial planning tools.