Australia · Explainer

Division 293 tax

An additional 15% on concessional contributions for clients whose income plus contributions exceeds $250,000. The threshold has not moved since 1 July 2017; the cap it is measured against has. Here is the mechanism, and who it catches next.

AU FY2026-27 Law Last reviewed 31 July 2026

What it is

Division 293 charges an extra 15% on concessional contributions made by clients whose income for surcharge purposes plus those contributions exceeds $250,000. It halves the concession: the contribution is taxed at 15% in the fund and 15% again under Division 293, so the effective rate on that contribution is the two combined.

The rate is applied to the lesser of two amounts — the concessional contributions, and the amount by which income plus contributions exceeds $250,000. That second leg is what makes the tax phase in rather than land as a cliff, and it is why a client just over the threshold pays a fraction of the maximum.

Key figures

Division 293 income threshold
$250,000
Division 293 additional rate
15%
Maximum Division 293 liability
$4,875
Concessional contributions cap
$32,500

How it is worked out

The structure

liability = 15% × min( concessional contributions, (income + concessional contributions) − $250,000 )⁺

Income for surcharge purposes is broader than taxable income: it adds back reportable fringe benefits, net financial investment and rental losses, and other amounts. Contributions are counted once in the threshold test and once as the amount the rate can attach to.

  • Two legs, lesser wins. A client $10,000 under the threshold on income alone is only $22,500 over it once contributions are added, so only that amount is taxed — not the whole contribution.
  • The ceiling is the cap. Once income is far enough above $250,000 the contributions become the lesser leg, and the liability stops growing at $4,875 however high income goes.
  • Assessed to the individual. The assessment goes to the client, who can pay it personally or release the amount from super. It is not deducted inside the fund.
  • Still a concession. Even at 15% plus 15%, a concessional contribution beats the top marginal rate of 45% plus the 2% Medicare levy. Division 293 narrows the gap; it does not close it.

Worked examples

Three clients, each contributing the full $32,500 concessional cap. Every figure is computed by the estimator below.

Division 293 liability at three income levels
  Well over the threshold Partly over Dragged over by the cap
Income for surcharge purposes $300,000 $240,000 $230,000
Concessional contributions $32,500 $32,500 $32,500
Combined $332,500 $272,500 $262,500
Over $250,000 $82,500 $22,500 $12,500
Amount taxed at 15% $32,500 $22,500 $12,500
Division 293 tax $4,875 $3,375 $1,875

The first client is at the ceiling: income is far enough above the threshold that the contributions are the lesser leg, so the liability is $4,875 and no amount of extra income changes it. The second pays $3,375 because only $22,500 of the contribution sits above the line. The third is the one worth watching: on $230,000 of income, the client is under the threshold before contributions and $12,500 over it after them.

Division 293 estimator

Income for surcharge purposes is broadly taxable income plus reportable fringe benefits, net investment losses and other add-backs — enter it before contributions; the estimator adds them for the threshold test. The rate applies to the lesser of the contributions and the amount over $250,000, so the liability cannot exceed $4,875.

$240,000

$32,500

Estimated Division 293 tax

$3,375

15% of $22,500 — the lesser of the contributions and the amount over $250,000.

Income plus contributions
$272,500
Amount over $250,000
$22,500
Amount the rate applies to
$22,500
Which leg binds
The amount over the threshold

Simplified illustration for education — not advice.

Practical points

  • The cap indexation is the trigger to re-check. Every step in the concessional cap moves clients into Division 293 without any change in their salary. The caps by year are on the rates page.
  • SG alone can do it. At the 12% SG rate, employer contributions on a salary near the threshold are enough to cross it without any salary sacrifice at all.
  • A catch-up year is a Division 293 year. Using carried-forward cap space lifts contributions well above the annual cap, so the liability in that year can exceed $4,875. Worth modelling before the contribution, not after.
  • Releasing from super has a cost. Paying the assessment out of the fund is convenient and permanently smaller than paying it personally — the released amount stops compounding inside the concessional environment.
  • Assessments arrive late. The assessment follows the client’s return and the fund’s reporting, so it commonly lands a year after the contribution decision. Set the expectation at the time of the advice.

Questions we get asked

Is the Division 293 threshold indexed?
No — and there is no indexation mechanism attached to it. It has sat at $250,000 since 1 July 2017 while the concessional cap has risen from $27,500 to $32,500, so the same client crosses it at a lower salary each time the cap moves.
Does salary sacrifice count toward the $250,000?
Yes. Concessional contributions — employer SG, salary sacrifice and personal deductible contributions — are added to income for surcharge purposes to test the threshold, and they are also the amount the 15% can be applied to. Sacrificing more can push a client over the line and increase the liability at the same time.
What is the most Division 293 tax a client can pay in a year?
$4,875 for FY2026-27 — the 15% applied to the full $32,500 concessional cap. The liability is bounded by the contributions, not by how far income exceeds the threshold, so it rises only when the cap indexes.
Is the tax on the contributions or on the income above the threshold?
On the lesser of the two. A client whose income alone is above $250,000 but who makes no concessional contributions has no Division 293 liability, because there is nothing for the 15% to attach to.
Can a one-off capital gain trigger it?
Yes. Income for surcharge purposes starts from taxable income, which includes the net capital gain for the year, so an asset sale can create a single-year liability for a client who is otherwise well under the threshold. Worth flagging before the sale, not after the assessment.
How is it paid?
It is assessed to the individual, not the fund. The client can pay it personally or elect to release the amount from a super interest with a release authority — releasing it reduces the super balance, so the choice is worth making deliberately rather than by default.

Sources

Sourced from the reference below. The figures on this page come from the same reference file as the rates and thresholds page.

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