James is 47, an investment banker in North Sydney earning $300,000 a year. His before-tax super contributions for 2025–26 came to $30,000, the full cap for that year. He lodged his 2025–26 return in August, got his refund, and moved on. Some weeks later a second letter arrived from the ATO: a Division 293 notice of assessment for $4,500 (15% of $30,000), due in 21 days. No error, no audit. It's a tax most people don't hear about until the year they earn enough to pay it.
Division 293 in four lines:
- Who: income + concessional super contributions above $250,000 (threshold unchanged since 2017, not indexed)
- What: an extra 15% on the lesser of your concessional contributions or the amount above $250,000
- Most you can pay in 2026–27: $4,875 (15% of the $32,500 contributions cap; more only if you also use unused cap from earlier years). For 2025–26 it was $4,500 (15% of $30,000)
- When: billed separately, after your return is processed — 21 days to pay, or elect to release the money from super
Check your exposure — the calculator flags Division 293 automatically → Salary Sacrifice Calculator
What Division 293 Is — and What It Isn't
Concessional super contributions are normally taxed at a flat 15% inside your fund — a deliberate concession against marginal rates of up to 47%. Division 293's logic is that the concession is too generous at the top: once your income passes $250,000, the government claws back another 15%, so your contributions are effectively taxed at 30%. Still cheaper than your marginal rate — more on that below — but no longer half price.
Don't confuse it with Division 296, the new tax on super earnings above a $3 million balance that took effect on 1 July 2026. Division 293 is about your income and contributions this year; Division 296 is about the size of your balance. A high earner with an average balance pays 293 and not 296 — we've covered Division 296 separately.
How the ATO Works Out Your Bill
The ATO builds a number called Division 293 income: your taxable income, plus reportable fringe benefits, plus net investment and rental property losses (yes, negative gearing losses are added back), plus certain family trust distributions — plus your concessional contributions (employer super, salary sacrifice, and personal deductible contributions). If the total tops $250,000, the tax is:
15% × the lesser of (your concessional contributions) and (the amount above $250,000)
| Example (2026–27) | Just over: $260k salary | Well over: James at $300k |
|---|---|---|
| Taxable income | $260,000 | $300,000 |
| Concessional contributions | $31,200 (employer) | $32,500 (cap) |
| Division 293 income | $291,200 | $332,500 |
| Amount above $250,000 | $41,200 | $82,500 |
| Taxed amount (the lesser) | $31,200 | $32,500 |
| Division 293 tax (15%) | $4,680 | $4,875 |
The "lesser of" rule protects people just over the line: at $255,000 of Division 293 income, only $5,000 sits above the threshold, so the bill is 15% × $5,000 = $750 — not 15% of everything you put into super. The bill grows until your whole contribution amount is above the line. From there it's 15% of your contributions: $4,875 if you contribute the full $32,500 cap in 2026–27.
Enter your income and sacrifice amount — the calculator flags Division 293 exposure automatically and nets it out of your tax saving.
The Bill Arrives After Your Refund — Don't Sit on It
Division 293 isn't part of your normal assessment. The ATO waits for your return and your fund's contribution reporting, then issues a separate notice of assessment, often weeks or months after your return. Notices for 2025–26 go out as returns are processed, so they keep arriving through late 2026 and into 2027 for people who lodge later through a tax agent. You then have two ways to pay:
- Pay it personally within 21 days — the default due date on the notice.
- Release it from super: within 60 days you can lodge a release authority election, directing your fund to pay the ATO (the fund has 30 days to act). Your take-home is untouched; your retirement balance wears it.
Should You Still Salary Sacrifice Above $250k?
Almost always yes — and here's the misconception to clear first. Salary sacrifice does not reduce your Division 293 income. The calculation deliberately excludes reportable super contributions from the income side and adds them on the contributions side — so every dollar you sacrifice leaves the $250,000 test exactly where it was. You cannot sacrifice your way out of Division 293.
But you don't need to. With Division 293, contributions are taxed at an effective 30%. Your alternative — taking the money as salary — is taxed at 47% (45% plus the 2% Medicare levy). That's still a 17-cents-per-dollar saving on every dollar contributed within the $32,500 cap. On James's 2026–27 numbers, filling the cap costs him $4,875 in Division 293 tax but saves roughly $5,500 more than taking the same dollars as salary. Division 293 narrows the concession; it doesn't kill it.
The Threshold That Never Moves
Division 293 started in 2012 with a $300,000 threshold, dropped to $250,000 on 1 July 2017 — and has been frozen there since, with no indexation in the law. Meanwhile wages have grown every year, so each year the tax quietly reaches further down the income scale. The take: if you're on $220,000–$240,000 with a bonus, investment property losses (added back, remember) or reportable fringe benefits, run the numbers before assuming this is someone else's tax.
Frequently Asked Questions
What is Division 293 tax?
An extra 15% tax on before-tax super contributions for people whose income plus those contributions is more than $250,000 a year. It means those contributions are taxed at 30% instead of 15%. It started in 2012 with a $300,000 threshold, which dropped to $250,000 from 1 July 2017, and the threshold doesn't rise with inflation. It's on top of your normal income tax.
How is Division 293 tax calculated?
The ATO adds your income (your taxable income plus a few items such as fringe benefits, investment and rental losses, and some family trust payments) to your before-tax super contributions. If the total is over $250,000, you pay 15% on whichever is smaller: your contributions, or the amount over $250,000. For example, $260,000 of income plus $31,200 of employer super is $291,200. That's $41,200 over the threshold, and the smaller figure is the $31,200 of contributions, so the tax is 15% of $31,200: $4,680.
How do I pay a Division 293 assessment — can it come out of my super?
Yes, it can. The ATO sends a separate Division 293 notice after your tax return is processed. You can pay it yourself within 21 days, or within 60 days choose to have the money released from your super fund, which then has 30 days to pay the ATO. Choosing the super option doesn't move the 21-day due date, so interest can build up while you wait: the general interest charge, 11.51% a year for October to December 2026, which is no longer tax-deductible. Making the choice early avoids that.
Does salary sacrificing reduce my Division 293 tax?
No. Salary sacrifice moves money from your income into your super contributions, but Division 293 counts both together, so the total doesn't change. Salary sacrifice still saves tax overall: those contributions are taxed at 30% instead of 47% (the 45% rate plus the 2% Medicare levy). It just can't get you under the $250,000 line.
What is the difference between Division 293 and Division 296?
They tax different things. Division 293 taxes money going into super (before-tax contributions) when your income plus contributions is over $250,000, and it has applied since 2012. Division 296 is a newer tax on the earnings of super balances over $3 million; it became law on 13 March 2026 and started on 1 July 2026. A high earner with a modest balance can pay Division 293 and never Division 296, and a retiree with a large balance and no salary can be the other way round.