Division 293 Tax: Are You Paying Extra Tax on Your Super?
- July 10, 2025
- Posted by: Admin
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Superannuation in Australia offers a powerful way to save for retirement while enjoying tax concessions. But for high-income earners, there’s one tax you may not be watching closely — Division 293 Tax.
About
Division 293 Tax is an additional 15% tax applied to concessional (pre-tax) superannuation contributions for individuals whose income exceeds $250,000 per year.
Super contributions are usually taxed at a concessional rate of 15%, which benefits high earners more than others. The government introduced Division 293 to even out the tax advantage and ensure a fairer retirement system.
Who Needs to Pay Division 293 Tax?
You may be liable for Division 293 Tax if your adjusted income — which includes taxable income, fringe benefits, investment income, and other assessable earnings — combined with your concessional super contributions (such as employer Super Guarantee and salary sacrifice amounts), exceeds $250,000 in a financial year. This tax is designed to ensure the superannuation system remains equitable by limiting the tax advantages available to high-income earners.
What Counts as Concessional Contributions?
Concessional contributions are pre-tax contributions made to your super fund. These include employer Super Guarantee contributions (11.5% from July 2024, increasing to 12% from July 2025), salary sacrifice contributions, and personal tax-deductible contributions. The concessional contributions cap for the 2025–26 financial year is $27,500.
Example Scenario
If your taxable income is $240,000 and your employer contributes $26,400 to your super, your combined income and concessional contributions total $266,400 — exceeding the $250,000 threshold. Division 293 Tax would then apply to the $16,400 above the threshold. At a rate of 15%, this results in an additional tax of $2,460.
How is Division 293 Tax Paid?
After your tax return is lodged and assessed, the Australian Taxation Office (ATO) will notify you if you’re liable for Division 293 Tax. You can choose to pay the tax directly, or elect to release the amount from your super fund using a Division 293 release authority form.
Exemptions and Special Cases
If your income is under $250,000, you are not subject to Division 293 Tax. Likewise, if your income exceeds $250,000 but you made no concessional super contributions, the tax does not apply. Individuals who are members of defined benefit superannuation funds may have their Division 293 liability calculated using specific rules and adjusted formulas determined by the ATO.
Temporary residents
Temporary residents are entitled to a refund of any Division 293 Tax paid if they receive a Departing Australia Super Payment (DASP) to which withholding tax applies. The refund will equal all Division 293 payments made during their time as a temporary resident. To request a refund, individuals must apply through the ATO using the appropriate form available on ato.gov.au.
How to Stay Ahead
Managing your concessional contributions proactively can help avoid Division 293 Tax surprises. It’s important to track your contributions throughout the financial year to ensure they do not exceed the cap. You should also review any salary sacrifice arrangements with your tax advisor to determine if adjustments are necessary. Using accounting tools such as Zoho Books can help monitor income and super contributions, particularly if income is received from multiple sources or entities. It is also worth reviewing whether additional super contributions remain tax-effective after factoring in potential Division 293 liabilities.
Tips to Manage Division 293 Tax
To effectively manage Division 293 Tax:
∙ Be aware of how close your income is to the $250,000 threshold.
∙ Review your salary sacrifice arrangements regularly.
∙ Consider the timing of income and super contributions where legally appropriate.
∙ Seek professional guidance from a registered tax agent for tailored advice.
Conclusion
Division 293 Tax can come as an unexpected expense, especially for professionals and business owners whose income fluctuates around the threshold. However, with proper planning, you can minimise its impact or even avoid it altogether. At SVT Advisors, we assist clients in reviewing their superannuation strategies, optimising contributions, and ensuring full compliance with ATO regulations. If you believe you may be affected by Division 293 Tax or simply want to improve your super planning, we are here to help.