Division 293 Tax Overview (tax to reduce concessional tax on Super contributions)

Author: Duncan Warnock CPA | September, 2025

Division 293 Tax Overview   

Often when a taxpayer receives notice from the tax office of an additional tax on concessional super contributions (Division 293) it comes as a surprise & the taxpayer is unsure why this has been sent to them. Division 293 tax is administered by the tax office separately from the income tax system.

Division 293 reduces the tax concession high income earners receive on concessional super contributions when their combined ‘Division 293 income’ plus ‘Division 293 Super contributions’ is over the threshold ($250,000 in 2025 tax year). 

When does the Division 293 tax apply?

If your combined Division 293 income plus your Division 293 super contributions exceed the Division 293 threshold ($250,000 for 2025 tax year), you are taxed at 15% on the lower of either:

1. your concessional super contributions, or
2. the amount that is over the Division 293 threshold of $250,000 ($250,000 in 2025 tax year)

– whichever amount is lower.

How does the Tax Office calculate your Division 293 tax amount?

The Tax Office calculate your Division 293 tax amount by:

1. determining your Division 293 income
2. determining your Division 293 super contributions
3. adding your Division 293 income and your Division 293 super contributions.

The tax applied will be 15% of the ‘taxable contributions’ (lesser of Div 293 Super or amount over the $250,000 threshold)

Read further below for example Scenarios on how the Division 293 tax can apply to a taxpayer

How you will know if you need to pay

If you're liable to pay, the TAX OFFICE will send you an Additional tax on concessional contributions (Division 293) notice (Division 293 notice) after they receive both your income tax return and contribution information from your super fund.

How to pay

You can pay Division 293 tax liabilities to the TAX OFFICE either:

1. with your own money
2. by releasing money from super by ‘Making an election to release money from super’.

Scenarios on how Division 293 Tax is calculated

Scenario 1 – No Division 293 Tax applies.

Luke Warm has ‘Division 293 income’ of $220,000 and ‘Division 293 super contributions’ of $25,300

Division 293 income + Division 293 super contributions = $245,300

Division 293 Tax Outcome: No Division 293 tax applies.

• Combined Total of Division 293 income & ‘Low tax’ Super Contributions is under the Division 293 threshold of $250,000

Scenario 2 (Method 1) – Division 293 Tax applies. Division 293 calculated on amount over the Division 293 tax threshold

Ruth Less has Division 293 income of $230,000 and ‘Division 293 super contributions’ of $26,450

Division 293 income + Division 293 super contributions = $256,450 ($6,450 over the threshold)

Division 293 Tax Outcome: Division 293 tax of $967.50

• Based on ‘Division 293 combined income & concessional super’ over the Div 293 threshold 15% x $6,450 ($256,450 less $250,000) = $967.50

Scenario 3 (Method 2) – Division 293 Tax applies. Division 293 calculated on Division 293 Super Contributions

Margaret River has ‘Division 293 income’ of $260,000 and ‘Division 293 super contributions’ of $29,900.

Division 293 income + Division 293 super contributions = $289,900 ($39,900 over the threshold)

Division 293 Tax Outcome: Division 293 tax of $4,485 (15% x Super of $29,900)

• Division 293 tax is calculated on the Super Contributions as the Super contribution amount is less than the amount that the combined ‘Division 293 income’ + Super Contributions amount that is over the Div 293 threshold of $250,000 ($289,900 - $250,000 = $39,900)

How concessional tax treatment on Super contributions is different based on taxpayers’ income

If you are a high-income earner, your marginal tax rate is higher than an average income earner. When you make concessional contributions to your fund, you receive a larger tax concession than a low income earner as money paid into super is taxed within the super fund at a concessional rate of 15%.

Example #1

Heath Row earns income of $35,000 plus Super of $4,025 (11.5% x income)

The highest marginal rate of tax applied to Heath’s income is 18% (as per 2025 Tax Year resident income tax rates)

As concessional contributions are taxed within your super fund at a concessional rate of 15%, the tax concession that Heath receives on the SUPER of $4,025 by being paid as SUPER rather than as INCOME in his tax return is only 3% (18% less 15%)

Example #2

Bea Sting earns income of $50,000 plus Super of $5,750 (11.5% x income)

The highest marginal rate of tax applied to Bea’s income is 32% (as per 2025 Tax Year resident income tax rates)

As concessional contributions are taxed within your super fund at a concessional rate of 15%, the tax concession that Bea receives on the SUPER of $5,750 by being paid as SUPER rather than as INCOME in her tax return is 17% (32% less 15%)

Example #3

Al Packer earns income of $200,00 plus Super of $23,000 (11.5% x income)

The highest marginal rate of tax applied to Al’s income is 47% (as per 2025 Tax Year resident income tax rates)

As concessional contributions are taxed within your super fund at a concessional rate of 15%, the tax concession that Al receives on the SUPER of $23,000 by being paid as SUPER rather than as INCOME in his tax return is 32% (47% less 15%)

The Tax office seeks to reduce the tax concession granted to the high-income earner by imposing the Division 293 tax (an additional tax of 15%) to bring the tax concession back to an amount more in line with the average taxpayer.

The Tax office seeks to reduce the tax concession granted to the high-income earner by imposing the Division 293 tax (an additional tax of 15%) to bring the tax concession back to an amount more in line with the average taxpayer.