Division 293 extra tax on Super.
Division 293 tax
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The high earners' super surcharge, explained
Division 293 is an extra 15 percent tax that the ATO levies on the concessional super contributions of high earners. Normally money going into super under the concessional cap is taxed at just 15 percent inside the fund, which is a generous gap below the top marginal rate of 47 percent including the Medicare levy. Division 293 exists to narrow that gap for people earning a lot, on the view that the tax break on super was never meant to be worth 32 cents in the dollar to the highest paid. If your combined income plus contributions clears $250,000, the slice above the line gets taxed an additional 15 percent.
This tool tells you how much of that extra tax you face. It adds your income to your concessional contributions, measures how far the total sits above $250,000, and applies 15 percent to the smaller of that excess or your actual contributions. It is built for executives, specialist doctors, senior consultants, and anyone whose pay plus super is closing in on a quarter of a million dollars.
How the $250,000 line is drawn
The threshold is not your salary alone. The combined figure adds your taxable income, reportable fringe benefits, net investment losses, and your concessional contributions together. Only the amount pushing you over $250,000 is hit, and the tax is capped at your contributions, so you never pay Division 293 on more than what actually went into super. That last detail is why someone just over the line pays far less than someone deep into the high-income band.
A $280,000 earner with a full year of contributions
Take the defaults: $280,000 of income and $30,000 of concessional contributions, which is the full cap. Combined income reaches $310,000, so $60,000 sits above the threshold. Because that excess is larger than the $30,000 of contributions, the whole contribution is caught.
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The result is $4,500. Notice that contributions are now taxed at 15 percent inside the fund plus 15 percent under Division 293, a combined 30 percent. That is still well below the 47 percent this person would pay if the same money were taken as salary, so salary sacrifice keeps working. The arbitrage is simply halved.
Paying it, and a trap with one-off income
The ATO issues a Division 293 assessment after your tax return is processed. You can pay it from your own pocket or, more commonly, release the money from your super fund using an election form, since the tax was triggered inside super anyway. Either is fine, but releasing it shrinks your super balance, so high earners with strong cash flow often pay it personally and leave the super intact to keep compounding.
The trap worth flagging is the year you cross the line by accident. A large bonus, a capital gain, or a redundancy payout can lift your combined income over $250,000 for a single year and pull contributions you made in good faith into Division 293. If you can see a spike coming, that is the year to be careful about how much you salary sacrifice, because the extra 15 percent can quietly erase the benefit of topping up.
Does the employer's compulsory super count toward the $250,000?
Yes. The 12 percent superannuation guarantee your employer pays is a concessional contribution, so it is added into the combined income figure alongside any salary sacrifice. On a high salary the guarantee alone can be enough to tip you over once it is stacked on your income, even before you make extra contributions.
Is salary sacrifice still worth it above the threshold?
Usually yes. Even at the combined 30 percent rate, sacrificing into super beats paying 47 percent on the same dollar as take-home pay. The benefit per dollar is smaller than for a middle-income earner, so weigh it against your need for accessible cash, but for most high earners the cap is still worth filling.