Division 293 Tax Australia: Extra 15% on Super When Income Is High

What Division 293 actually taxes

Concessional contributions are generally taxed 15% in the super fund. Division 293 imposes an additional 15% on the amount that the law treats as the taxable slice, which is effectively the overlap between (a) your low-tax contributed amounts for the year (in typical accumulation cases, the same dollars as your concessional contributions) and (b) the amount by which income for surcharge purposes plus those low-tax contributions exceeds the $250,000 threshold (see Division 293 of the Income Tax Assessment Act 1997).

On the slice that is caught, total tax on that slice can be thought of as 15% fund tax plus 15% Division 293, i.e. 30% combined on that part. Amounts that never cross the threshold stay at the ordinary 15% fund tax only. Amounts above the concessional cap are a different problem (excess contributions tax and charges), so keep Division 293 separate from cap breaches in your head.

Income for surcharge purposes (why it is not just “salary”)

The ATO starts from a wider base than “taxable income” on the label people use in conversation. Items that often matter include reportable employer super contributions, reportable fringe benefits, certain investment losses treated in defined ways, and other add-backs listed in tax law. The full list moves with legislation; your myTax worksheets and final notice of assessment are the ground truth for your household.

Because of those add-backs, some taxpayers discover Division 293 even when their “headline” salary sits below $250,000. Others with salary above the threshold might have deductions or components that change the surcharge income number. The section below explains the salary sacrifice case in steps so you can anticipate the notice, not only recognise it afterwards. Treat published thresholds as a signpost, not a DIY diagnosis.

Why concessional super is added back into the test

It can feel odd that the law adds concessional contributions on top of income for surcharge purposes when you already think of those contributions as “separate” from salary. The reason is structural. Concessional contributions generally reduce or bypass the income that would otherwise be taxed at marginal rates in your personal return (employer contributions are not assessable to you when paid; salary sacrifice lowers taxable wages). If Division 293 only looked at taxable income without adding those amounts back, a high earner could salary sacrifice heavily, report taxable income under $250,000, and still receive large pre-tax super support. Parliament fixed that gap by testing income for surcharge purposes plus low-tax contributions (see Division 293 of the Income Tax Assessment Act 1997, including s 293-20, which builds the combined income figure the ATO applies against the threshold). The threshold is therefore a test on economic capacity including super funded from pre-tax cash flow, not a headline salary line in isolation.

If you salary sacrifice: anticipate the combined total, not taxable income alone

1. What changes on your payslip: You agree to a lower taxable salary or wages and a larger employer contribution to super. The dollars that left your taxable wages did not disappear from the economy. They became (or are reported as) concessional contributions for the year.
2. What many people check by mistake: They compare taxable income, or gross after sacrifice, to $250,000 and assume Division 293 cannot apply. That check ignores the second limb of the statutory test.
3. What the law checks instead: Income for surcharge purposes (already wider than taxable income; see above) plus your low-tax contributions for the same year. Salary sacrifice does not remove those contribution dollars from that sum; it is exactly why they are brought in alongside surcharge income.
4. How to model it before 30 June: In myTax or professional software, locate income for surcharge purposes for the year you are testing. Add total concessional super you expect to be allocated for that year (SG, salary sacrifice, personal deductible, and any other concessional amounts that count as low-tax contributions for you). If IFSP + contributions > $250,000, Division 293 is in play; then apply the “lesser of” rule in the worked section to estimate the taxable slice.

Link to the table: Example B is deliberately a “sacrifice surprise” shape: $240,000 income for surcharge purposes plus $30,000 low-tax contributions equals $270,000, so you are $20,000 above the threshold even though the income component alone sits below $250,000. That is the arithmetic people miss when they only eyeball taxable wages.

Low-tax contributions versus “concessional” in everyday speech

The statute and ATO materials speak in terms of low tax contributed amounts (often shortened to low-tax contributions). For typical accumulation interests, that amount lines up with concessional contributions (SG, salary sacrifice, personal deductible). That is why articles (and calculators) often use “concessional” as shorthand. The alignment is not universal: defined benefit interests and some other arrangements use different valuation and allocation rules, so the low-tax amount can diverge from the simple cap number you see on a payslip. If you have DB or hybrid super, treat generic examples as background only and get product-specific advice.

Worked numbers (illustrative, not your assessment)

The ATO formula uses the lesser of your low-tax contributions for the year (modelled below as ordinary concessional contributions) and the amount by which income for surcharge purposes plus those contributions exceeds the threshold. A simplified arithmetic pattern (aligned with how many calculators, including SuperCalc Pro’s engine helper, bracket the idea) looks like this:

1. Add income for surcharge purposes and low-tax contributions (here: concessional contributions) for the year.
2. Subtract $250,000. If the result is zero or negative, Division 293 does not apply on that simplified story.
3. If positive, the taxable amount for the extra 15% is the minimum of that positive gap and your low-tax contributions (here: concessional contributions).
4. Multiply that taxable amount by 15% to get Division 293 tax.

Illustrative components	Example A	Example B
Income for surcharge purposes (simplified)	$260,000	$240,000
Low-tax contributions (illustrated as SG plus salary sacrifice)	$27,500	$30,000
Combined total	$287,500	$270,000
Above $250,000 threshold	$37,500	$20,000
Taxable slice (lesser of excess and contributions)	$27,500	$20,000
Division 293 tax at 15%	$4,125	$3,000

Example A shows the common case where the whole concessional cap is still inside the “above threshold” gap, so all $27,500 is taxed under Division 293. Example B is the pattern salary sacrificers miss: surcharge income under $250,000, but combined with contributions still over, so only $20,000 of the $30,000 contributions picks up the extra 15%. These are classroom numbers. Your notice can differ once every reportable item is applied.

How the ATO collects it

Division 293 tax is assessed through the personal tax return. You receive a notice with the dollar amount. You may pay from personal cash or ask the ATO to release money from a super fund using the standard release process. Paying from super reduces retirement capital but can ease cash flow in the year of assessment. Paying personally preserves super but ties up liquidity outside the fund. Many people involve an accountant to model the cash-flow impact once, then set a standing preference for future years if the liability is recurring.

Interaction with spouse contributions and splitting

Strategies such as spouse super contributions or contribution splitting change whose account grows and sometimes which year a contribution is counted, but they do not magically remove Division 293 law. Any arrangement needs to stack up under super splitting rules, caps, and the actual income tests for the individuals involved. General articles cannot map that to your household without crossing into personal advice.

SMSF trustees and employees

If you are in an SMSF, Division 293 still sits on the member side, not as a special SMSF levy. Employers still report concessional contributions through STP; personal deductible contributions flow through your tax return. The fund receives the usual 15% tax on concessional amounts; Division 293 is assessed to you. Keeping a running view of expected income plus planned concessional contributions is part of why contribution planning tools exist in SMSF software stacks.

Bottom line

Division 293 tax Australia is an extra 15% on the part of your low-tax contributions (for most readers, concessional super) that falls on the high-income side of the $250,000 test applied to income for surcharge purposes plus those contributions. It turns some contributions from a 15% fund tax story into a 30% story on that slice. It is separate from cap breaches, separate from superficial US “surtax” analogies, and it is always tied to your personal return and ATO notices.

If you are near the line, the useful habit is to run the numbers before 30 June using myTax drafts or professional software, not after the assessment arrives. The Suite can give a directional view; the ATO remains authoritative.