Division 293 Tax: What Triggers It, How It's Calculated, and EOFY Planning

General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.

Once you are inside Division 293, the interesting question is no longer what is it — it is what, if anything, you can still do about it, and when. Most of the moves people reach for first do nothing at all, because the Division 293 formula is built to see through them.

This article is the planning companion to Division 293 Tax 2025-26: the extra 15% on super over $250k, which covers who pays, the full calculation walkthrough with a worked example, and how the assessment and release-authority process works. Start there if you need the mechanics. Come here for the decisions: which levers move the bill, which years to make your contributions in, and the traps that quietly push the problem into next year.

The Mechanic in 60 Seconds

You only need four facts to follow everything below.

1. The threshold is $250,000, and it is your Division 293 income plus your Division 293 super contributions that is tested against it — not your salary. It has been $250,000 since 2017-18 and is not indexed, so wage growth alone pulls more people in each year.
2. Division 293 income is broader than taxable income. It is the same income test used for the Medicare levy surcharge, disregarding reportable super contributions, so it adds back reportable fringe benefits, net financial investment losses and net rental property losses. Reportable super contributions are deliberately left out of the income side because they are already counted on the contributions side.
3. The contributions counted are your concessional contributions, excluding any excess concessional contributions. In practice that caps them at your concessional cap for the year — $30,000 in 2025-26 — unless carry-forward has raised your personal cap, in which case the whole higher amount counts.
4. The tax is 15% of the lesser of the excess over $250,000, or those contributions. So the bill is capped at 15% of your cap: $4,500 in 2025-26 for someone on the general $30,000 cap.

Everything in the rest of this article follows from point 4: your Division 293 bill has a ceiling, and the ceiling is set by how much you put into super — not by how far over $250,000 you are.

The Ceiling Most High Earners Never Notice

There is a quirk of the 2025-26 numbers that shapes the whole planning picture: the compulsory SG your employer must pay stops growing at exactly the concessional cap.

The maximum super contribution base for 2025-26 is $62,500 per quarter — $250,000 a year — and the maximum SG payment is $7,500 per quarter, or $30,000 a year. Employers are not required to pay SG on earnings above that base, and $30,000 is exactly the general concessional cap. So for someone earning $250,000 or more whose employer pays only the SG minimum and who makes no voluntary contributions:

• Compulsory SG is $30,000, the cap is $30,000, and there is no headroom left for voluntary concessional contributions without going into excess.
• Division 293 contributions are $30,000, and the bill is $30,000 × 15% = $4,500.
• Earning more does not increase the Division 293 bill at all. Someone on $300,000 and someone on $700,000 pay the same $4,500, because the “lesser of” test bites on the contributions side for both.

Check your own payslip before relying on this: many employers contract to pay 12% of full salary rather than stopping at the maximum contribution base, and an employer who does is putting you into excess concessional contributions unless you have carry-forward headroom. Excess contributions are outside the Division 293 base — they are taxed at your marginal rate instead — so the surcharge still plateaus, but for a different and more expensive reason.

That quarterly base is a 2025-26 construct: it applies to quarters ending on or before 30 June 2026. From 1 July 2026, payday super replaced it with a single annual maximum contribution base — see Super Guarantee Hits 12% — and Payday Super Starts July 2026 for the current shape and figure.

That is worth internalising before you start optimising. Above roughly $250,000 of salary, Division 293 is a flat $4,500 annual cost of having super, not a percentage that scales with your income. The planning question stops being “how do I get under the threshold” — you will not — and becomes “is the 30% still worth it”, which is answered in the explainer’s salary-sacrifice comparison.

The planning genuinely matters in a narrower band: roughly $223,000 to $250,000 of salary, where you are pulled over the line by your own SG, and in any year where a one-off event spikes your income.

Which Levers Actually Work

The single most common mistake is the first row. Making extra concessional contributions does not help you avoid Division 293 — it is the one intuition almost everyone brings to the problem and it is exactly backwards. If you were sitting just below the threshold on income alone, a voluntary contribution is what pushes you over.

The deductions row deserves care, because the add-backs make it narrower than it looks. Prepaying interest on a rental property does not help if the property is already negatively geared: the deeper loss is added straight back for Division 293. Deductions that genuinely lower the combined total are the ones that do not create or deepen a net investment or rental loss — work-related expenses, self-education, income protection premiums, deductible donations and the cost of managing your tax affairs.

Timing: The Only Lever With Real Leverage

Because the test runs year by year, when you contribute matters far more than whether you contribute.

If your income oscillates around $250,000, front-load your voluntary contributions into the years you are below the line. In a below-threshold year, a concessional contribution costs 15% going in. In an above-threshold year, the same dollar costs 30%. Nothing else in the Division 293 rules produces a 15-percentage-point swing on an identical contribution.

If you are having a one-off high-income year — a bonus, an employment termination payment, a capital gain, back pay for a prior year — the ATO explicitly recognises this as a single-year event. Accept the surcharge for that year and, critically, do not compound it by making large additional concessional contributions in the same year. Those contributions are taxed at 30% instead of the 15% they would attract next year. For the dollar-by-dollar version of that decision at specific income bands, see the Division 293 tax impact scenario, which tabulates the trade-off of dialling salary sacrifice up or down either side of the threshold.

Carry-forward cuts both ways. If your total super balance was under $500,000 on 30 June of the previous year, you can use unused concessional cap from up to five prior years. But the ATO is explicit that when carry-forward raises your cap, all contributions inside the higher cap count for Division 293. A $70,000 catch-up contribution in an above-threshold year produces a $10,500 Division 293 bill rather than $4,500. Catch-up contributions belong in your below-threshold years — which is usually also when you actually have the unused cap and the sub-$500,000 balance.

The Employer Top-Up Trap

If your employer offers to “top up” your super to cover the Division 293 liability, that top-up is itself a concessional contribution. It counts toward this year’s cap and, if it lands in the following financial year, toward next year’s Division 293 calculation. A $4,500 top-up relieves Year 1 and enlarges Year 2’s base by $4,500 — and if SG already fills your cap, it is not concessional at all, it is an excess contribution taxed at your marginal rate.

A cash bonus of the same size is taxable at 47% but does not compound into the super system. Whichever way it is structured, check it against your remaining cap headroom before accepting it.

Who Should Actually Check

• Salaries of roughly $223,200 to $250,000. At 12% SG, salary above about $223,200 grosses up past $250,000 once SG is added, while the salary itself is still under it. This is the band where the surcharge is a genuine surprise and where planning can still change the answer.
• Anyone with a one-off spike — capital gain, bonus, redundancy, back pay.
• Anyone with reportable fringe benefits. A grossed-up novated lease amount is added to Division 293 income and can pull a $240,000 earner over the line on its own.
• Negatively geared investors, whose losses are added back and who therefore look further below the threshold than they are.

Paying It, Briefly

Division 293 is assessed separately, after both your tax return and your fund’s contribution reporting reach the ATO — which is why the notice often lands months after the year it relates to. You can pay it from personal funds or lodge a release authority so your fund pays it. Defined benefit members have their liability deferred to a debt account until a benefit is paid, with end-of-year interest applied to unpaid deferred debts. The explainer covers the release-authority process and the deadlines in full.

For planning purposes the only decision here is whether to release from super or pay cash. Releasing keeps the cost inside the system the tax relates to; paying cash preserves your balance, which matters if you are managing toward a specific retirement target or a transfer balance cap.

Record-Keeping

You never self-calculate Division 293 — the ATO builds it from your return and your fund’s reporting, and issues an assessment. Keep your income statement, any reportable fringe benefits amount, and your fund’s annual contribution statement so you can check the two numbers on the notice. If they are wrong it is usually the return or the fund’s reporting that needs correcting rather than the assessment; if you still disagree, the objection process applies.

Sources

• ATO — Division 293 tax on concessional contributions by high-income earners
• ATO — Division 293 rates and thresholds
• ATO — Contributions caps
• ATO — Super guarantee rates and maximum contribution base