Updated 6 September 2026
Division 293 tax is an extra 15% on concessional super contributions for high income earners. It applies when your income for surcharge purposes plus your low tax contributions exceeds $250,000. The tax is 15% of the lesser of those contributions and the amount over the threshold, so the affected dollars are taxed at 30% inside super instead of 15%.
For 2026-27 the threshold is $250,000, the standard concessional cap is $32,500, so a full year at the cap produces $4,875 of tax. Carry-forward unused cap lifts that ceiling, to $26,250 on the largest cap available this year. The ATO assesses it after your return is lodged and it is payable within 21 days.
| Step | What the ATO does | Your figure |
|---|
Verified 6 September 2026 against the ATO. Threshold $250,000, unindexed since 1 July 2017. Concessional cap $32,500 for 2026-27, $30,000 for 2024-25 and 2025-26. Rate 15%. The marginal rate comparison uses 2026-27 resident rates plus the 2% Medicare levy, ignoring the Medicare levy surcharge and offsets. Runs entirely in your browser. General information only, not advice.
Anyone whose Division 293 income plus low tax contributions exceeds $250,000 in a financial year. That catches more people than the headline suggests, because the income figure is wider than taxable income and the threshold has not been touched since 2017.
In practice we see it most in four groups: employees earning $220,000 or more, where 12% super guarantee alone carries them over; anyone with a bonus year, where a one-off payment pushes a normally-safe salary above the line; owners of negatively geared property, whose rental loss is added back for this purpose; and people with a novated lease or other reportable fringe benefits. Sole traders and business owners taking a large deductible personal contribution are the fifth, and usually the least surprised, because they chose the contribution.
$250,000 was set on 1 July 2017 with no indexation mechanism. The concessional cap does index, and rose to $32,500 on 1 July 2026. Wage growth walks a new group over the line each year while the maximum bill climbs with the cap. That is the design, not an oversight.
Concessional contributions, meaning employer super guarantee, salary sacrifice and personal contributions you claim a deduction for, are taxed at 15% inside the fund instead of at your marginal rate. The value of that concession depends entirely on what your marginal rate is. Someone in the 30% bracket saves 15 cents in the dollar by routing money through super. Someone on the top bracket, 45% plus the 2% Medicare levy, saves 32 cents. Same dollar, double the subsidy.
Division 293 of the Income Tax Assessment Act 1997 narrows that gap. Above the threshold, the extra 15% takes the effective rate on affected contributions from 15% to 30%, so the top earner's concession falls from 32 cents to 17 cents, roughly what a middle income earner receives. The mechanism sits on the individual rather than the fund, because working out your income requires your tax return. That is why the fund does not withhold it and why the bill arrives months after the year ends.
Five steps. Most confusion comes from the first, because the income figure the ATO uses is not your taxable income. It is income for surcharge purposes, the same base as the Medicare levy surcharge.
Step 1, income for surcharge purposes. Taxable income, plus reportable fringe benefits, plus any net financial investment loss, plus any net rental property loss, less any assessable first home super saver released amount. The two losses are added back because negative gearing reduces taxable income without reducing your capacity to contribute. Reportable super contributions are deliberately excluded here, because they are counted in step 2.
Step 2, low tax contributions. Your concessional contributions for the year, including employer contributions, salary sacrifice, personal deductible contributions and, for defined benefit members, notional taxed contributions, less any excess concessional contributions. The excess is removed because it is already taxed at your marginal rate under the excess contributions rules and should not be taxed twice.
Step 3, Division 293 income. Step 1 plus step 2.
Step 4, taxable contributions. The lesser of your low tax contributions and the amount by which Division 293 income exceeds $250,000. This lesser-of rule is why the tax phases in gradually instead of landing all at once when you cross the line.
Step 5, the tax. 15% of taxable contributions.
Taxable income $230,000, reportable fringe benefits $10,000, a rental property loss of $15,000 and $30,000 of concessional contributions. Income for surcharge purposes is $255,000, already over the threshold before super is counted, because the rental loss comes back in. Division 293 income is $285,000, which is $35,000 over. Taxable contributions are the lesser of $30,000 and $35,000, so $30,000, and the tax is $4,500. Someone looking only at their $230,000 taxable income would have expected $1,500.
Someone on $1,000,000 of taxable income with $120,000 of concessional contributions and a standard $32,500 cap pays $4,875, the same as someone who contributed exactly to the cap. The other $87,500 is excess concessional contributions. It is removed from the Division 293 base at step 2 and added to assessable income instead, taxed at 47% with a 15% offset, which is $28,000 of extra tax. Division 293 is bounded by your concessional cap. The excess contributions rules are what make over-contributing expensive.
| Financial year | Div 293 threshold | Concessional cap | Tax at the standard cap |
|---|---|---|---|
| 2026-27 | $250,000 | $32,500 | $4,875 |
| 2025-26 | $250,000 | $30,000 | $4,500 |
| 2024-25 | $250,000 | $30,000 | $4,500 |
| 2023-24 | $250,000 | $27,500 | $4,125 |
| 2017-18 to 2022-23 | $250,000 | $25,000 to $27,500 | $3,750 to $4,125 |
| 2012-13 to 2016-17 | $300,000 | $25,000 to $35,000 | varies |
That last column assumes you contribute exactly to the standard cap for the year. Carry-forward changes it. If your total super balance was under $500,000 at the previous 30 June and you have five clear years of unused cap behind you, your 2026-27 cap can reach $175,000, which is $26,250 of Division 293 tax. Contributing more than your cap does not push it higher, because the excess is removed from the base.
Enter the ATO's figure in the calculator and it shows the variance, the direction, and the taxable contribution amount the ATO must have used. When the two disagree, it is nearly always one of these six.
Reportable fringe benefits were left out. Novated leases, company cars and employer-paid expenses appear on your income statement as a grossed-up reportable amount. It is not taxed as income, but it counts here.
Investment losses were added back. A negatively geared property or a margin loan reduces taxable income, and the ATO reverses that for Division 293. If your taxable income is under $250,000 but you own an investment property at a loss, this is the usual reason for an unexpected assessment.
Contribution timing differs from your payslip. Contributions count in the year the fund receives them, not the year the wages were earned. A June salary sacrifice paid to the fund in July belongs to the next year. Payday Super from 1 July 2026 tightens this going forward, but earlier assessments still carry the mismatch.
Notional taxed contributions. Defined benefit members have a notional amount set by the fund actuary that often bears no resemblance to any cash figure they can see.
An excess concessional contributions determination. If you exceeded the cap, the excess is stripped out of the base. If the ATO's data shows a lower cap than the carry-forward you actually had, the excess figure is wrong on their side and both assessments need amending.
An amended return. Division 293 is reassessed whenever taxable income changes. A late deduction or an amended trust distribution moves the number.
Division 293 assessments carry objection rights like any other. If the variance traces to incorrect contribution data, the fund corrects its reporting and the ATO reassesses. If it traces to your return, an amendment fixes both. Do not pay a figure you cannot rebuild.
Start with the honest answer: if your income is consistently above the threshold, you do not avoid Div 293, you manage it. And in most cases you should not want to avoid it, because the alternative is worse. The affected contributions are taxed at 30%. Taking the same money as salary costs 45% plus the 2% Medicare levy. Paying the extra 15% still leaves you 17 points ahead, and the earnings on that money are then taxed at 15% or less inside the fund rather than at your marginal rate outside it.
What genuinely moves the number:
Time a one-off event. A bonus, a capital gain or an employment termination payment can push a normally-safe year over the line. Where you have any control over when it lands, moving it across a 30 June boundary can keep both years under the threshold rather than putting one well over.
Check the contribution year before topping up. A personal deductible contribution made in late June that the fund does not receive until July counts in the following year, which can be the difference between one assessment and two. Get the payment in with time to spare.
Reconsider salary sacrifice at the margin. Above the threshold, sacrificing gives you a 17 point saving rather than a 32 point saving. Still worth doing, but it changes the trade-off against paying down non-deductible debt or making non-concessional contributions, which Div 293 does not touch.
Split contributions to a spouse. Contribution splitting moves up to 85% of last year's concessional contributions into a lower-income spouse's account. It does not reduce your Division 293 assessment for the year the contribution was made, but it evens out balances over time and can matter for the transfer balance cap later.
Use carry-forward deliberately, not accidentally. If your total super balance was under $500,000 at the previous 30 June, unused cap from the past five years can be used in one year. That contribution is fully exposed to Div 293 and is also fully deductible at your marginal rate, so the same 17 point margin applies to a much larger sum. Done in a high-income or capital-gain year, it is usually the single most effective move available. Done by accident, it produces a surprise assessment.
All of these are timing and structure questions best answered before June, not in October when the notice arrives. Talk to your tax accountant while the year is still open.
The assessment is payable within 21 days of the notice. You can pay from your own funds, or within 60 days elect to have the amount released from your super fund using the release authority the ATO issues. Note the mismatch: the election window is 60 days but the due date is 21, so waiting on a release can attract interest.
On the numbers, paying personally is usually better if the cash is available, because money left in super keeps compounding in a 15% environment. Paying from super protects cash flow and is the right answer when the alternative is a credit card or a redraw. Defined benefit amounts are not a choice: the notional component is deferred to a debt account and accrues interest until the benefit is paid.
We rebuild Division 293 assessments from source, trace the variance to the return or the fund reporting, and lodge the amendment or objection. Chartered accountants and registered tax agents on Hindmarsh Square, Adelaide. The first conversation is free.
Talk to National AccountsAnyone whose Division 293 income, meaning income for surcharge purposes plus low tax contributions, exceeds $250,000 in a financial year. It commonly catches employees on $220,000 or more once 12% super guarantee is added, people with a bonus year, and anyone with a negatively geared property or a novated lease.
15% of the lesser of your low tax contributions and the amount by which your Division 293 income exceeds $250,000. Division 293 income is income for surcharge purposes, which is taxable income plus reportable fringe benefits plus net investment and rental losses, plus your concessional contributions after removing any excess.
It is $4,875 if you contribute a standard year of cap, $32,500. Carry-forward unused cap raises the ceiling: a 2026-27 cap built from five clear years plus the current year reaches $175,000, which is $26,250. Contributing more than your cap does not increase Division 293 tax, because the excess is stripped out of the base and taxed at your marginal rate instead.
Not if your income is consistently above the threshold. It can be managed by timing one-off income, watching which financial year a contribution lands in, and using carry-forward cap deliberately. In most cases you should not want to avoid it: 30% inside super still beats 47% as salary.
Because the ATO uses income for surcharge purposes, not taxable income. It adds reportable fringe benefits and reverses net investment and rental property losses. A negatively geared property is the most common reason someone under $250,000 of taxable income receives an assessment.
Usually not, if you have the cash. Money left in super keeps compounding in a 15% tax environment. Releasing it protects cash flow, which is the right call when the alternative is expensive debt. The election must be made within 60 days, but the tax is due within 21.
Yes. All concessional contributions count, including compulsory super guarantee, salary sacrifice and personal deductible contributions. Non-concessional, after-tax contributions do not.
Neither. It is not deductible, whether you pay it personally or release it from super. It is refunded only if an amendment brings your income below the threshold or the assessment was calculated on wrong data, in which case the ATO reassesses.
No liability, but accurate and timely reporting matters. Reportable fringe benefits and reportable employer super contributions on the income statement feed straight into the calculation, and late contributions land the amount in the wrong year for the employee.
General information only. It does not consider your circumstances and is not tax, legal or financial advice. Figures verified 6 September 2026 and subject to change. Liability limited by a scheme approved under Professional Standards Legislation.
