DIV 293: 5 Critical Mistakes Costing You Thousands

The DIV 293 tax is an additional tax on high-income earners’ concessional super contributions. Many Australians are unaware of how it works, which can result in unexpected tax bills and lost retirement savings.

Bradley Raw, CA SSA, Accredited SMSF Specialist, notes that “without careful planning, high-income earners risk paying thousands in extra tax that could otherwise stay invested in their super” (Raw, 2023).

This guide will cover five critical mistakes people make with DIV 293, and provide practical strategies to minimise liability and maximise super growth.

Understanding DIV 293

DIV 293, short for Division 293 tax, applies to concessional super contributions for individuals whose income exceeds the $250,000 threshold. It is designed to reduce tax concessions for high-income earners, making the super system fairer.

Key points include:

• The income threshold is $250,000 per financial year, which includes salary, bonuses, and reportable super contributions.
• Taxable contributions include employer contributions, salary sacrifice, and personal deductible contributions.
• The 15% contributions tax is increased to 30% for those affected by DIV 293 (ATO, DIV 293 tax).

The tax applies automatically if the ATO identifies that your income exceeds the threshold. It is collected by your super fund and reported to the ATO, but trustees need to understand how to plan contributions strategically to minimise the impact.

Mistake 1: Not Calculating All Income Sources

One of the most common mistakes is not accounting for all components of income when determining DIV 293 liability. Many high-income earners incorrectly assume only salary matters.

Income Sources Counted Toward the Division:

• Salary and wages
• Bonuses and commissions
• Net investment income, including dividends and capital gains
• Reportable fringe benefits (like car allowances or super contributions reported by employers)
• Reportable employer super contributions (MoneySmart, DIV 293 tax)

Example:
Sarah earns a salary of $220,000 and receives a $40,000 bonus and $10,000 in reportable super contributions. Even though her base salary is below $250,000, her total income of $270,000 triggers division 293. Many Australians miss this calculation, resulting in extra tax that could have been avoided with proper planning.

Tip: Always review all taxable components, not just your base salary, before making additional concessional contributions.

Mistake 2: Over-Contributing via Salary Sacrifice

Salary sacrifice contributions can be a valuable way to boost super, but over-contributing can push your income above the division 293 threshold.

Common Salary Sacrifice Mistakes:

• Increasing contributions without calculating total income including bonuses and employer contributions
• Ignoring existing contributions in multiple super funds
• Failing to adjust contributions after receiving year-end bonuses

Example:
John earns $230,000 and contributes $20,000 through salary sacrifice. His total income becomes $250,000, exactly at the threshold. Any bonus or extra employer contribution could trigger division 293.

Tip: High-income earners should carefully plan salary sacrifice contributions in consultation with an SMSF or superannuation accountant to avoid unnecessary additional tax (Morningstar, avoid paying extra super tax).

Mistake 3: Having Multiple Super Accounts

High-income earners often have several super accounts across different funds. This can cause unintentional over-contributions and division 293 exposure.

Issues with Multiple Accounts:

• Difficulty tracking contributions across funds
• Risk of exceeding concessional contribution limits
• Complicated reporting to the ATO, increasing risk of mistakes

Example:
Anna has three super accounts: one with her employer, one personal fund, and one SMSF. She makes a $15,000 salary sacrifice contribution in one fund while her employer contributes $20,000 to another. The combined contributions may push her over the DIV 293 threshold.

Tip: Consolidate super accounts where possible and maintain detailed records of all concessional contributions to monitor exposure effectively.

Mistake 4: Poor Timing of Contributions

The timing of contributions is critical for managing DIV 293 liability. Contributing large amounts late in the financial year can unintentionally trigger the tax.

Timing Mistakes Include:

• Making large deductible contributions in June without considering total income
• Receiving a year-end bonus that pushes income above the threshold
• Not factoring in employer contributions reported after the financial year

Example:
Michael contributes $30,000 as a deductible contribution in June. His bonus of $25,000 is received in July but relates to the previous financial year. If his total income for that year exceeds $250,000, he may be liable for DIV 293 on that $30,000.

Tip: Schedule contributions and bonuses carefully, and work with a financial adviser to model total income against the DIV 293 threshold.

Mistake 5: Ignoring Professional Advice

Division 293 rules are complex. Mistakes can be costly for high-income earners with:

• Multiple super accounts
• SMSFs or business ownership
• Variable income from salary, bonuses, or investments

Example:
Without guidance, Mark failed to account for employer contributions across his multiple super funds. He ended up paying division 293 on contributions that could have been adjusted to reduce tax.

Tip: Engage an accredited SMSF accountant to:

• Forecast division 293 liability
• Review contributions strategy
• Minimise unnecessary tax while maintaining super growth

Professional advice ensures contributions are structured optimally and compliance requirements are met (WA SMSF Specialists, SMSF Compliance Advice).

Additional Considerations for DIV 293 Planning

1. Use Concessional Contribution Cap Wisely: Keep contributions below the annual concessional cap ($27,500 for 2025/26) to avoid triggering additional tax.
2. Monitor Salary Sacrifice and Employer Contributions: Track these contributions carefully to remain under the threshold.
3. Consider Spreading Contributions Across Financial Years: If possible, splitting contributions across years can reduce division 293 exposure.
4. Check for Catch-Up Contributions: Individuals with unused concessional cap space can utilise it strategically without exceeding thresholds.
5. Review Investment Income: Investment returns can push total income over the division 293 threshold; plan contributions and asset allocations accordingly.

Conclusion

Division 293 tax is a critical issue for high-income earners making concessional super contributions. Mistakes such as underestimating income, over-contributing via salary sacrifice, ignoring multiple super accounts, poor timing, and failing to seek professional advice can lead to thousands of dollars in additional tax.

By understanding your total income, timing contributions strategically, consolidating accounts, and seeking professional guidance, you can minimise Division 293 liability and optimise your retirement savings. Bradley Raw, CA SSA, highlights that proactive planning is the key to avoiding costly mistakes and protecting your super.

FAQ: DIV 293

1. What is DIV 293?

DIV 293, or Division 293 tax, is an additional 15% tax on concessional super contributions for individuals with income above the $250,000 threshold. It applies on top of the standard 15% contributions tax, making the total tax on certain contributions 30%.

2. Who is affected by division 293?

High-income earners whose total income, including salary, bonuses, reportable super contributions, and investment income, exceeds $250,000 per financial year are liable for DIV 293. It affects both employees and self-employed individuals with concessional contributions.

3. Which contributions are subject to division 293?

The tax applies to concessional super contributions, including:

• Employer contributions
• Salary sacrifice contributions
• Personal deductible contributions to super funds (ATO, DIV 293 tax)

4. How can I reduce DIV 293 liability?

Strategies include:

• Monitoring total income against the $250,000 threshold
• Timing contributions carefully within the financial year
• Consolidating multiple super accounts to track contributions
• Consulting an accredited SMSF accountant for planning (WA SMSF Specialists, SMSF Compliance Advice)

5. Does DIV 293 apply automatically?

Yes, the ATO calculates DIV 293 liability based on your total income and reported super contributions. The tax is collected by your super fund, and you may receive a notice outlining the additional tax due.

6. Can multiple super accounts affect DIV 293?

Yes. Contributions across multiple accounts are aggregated to determine your total concessional contributions. Failing to track contributions from all funds can lead to accidental DIV 293 exposure (Morningstar, avoid paying extra super tax).

7. How does salary sacrifice impact DIV 293?

Salary sacrifice contributions count as concessional contributions and are included in your total income for DIV 293 purposes. Over-contributing through salary sacrifice can push your income above the threshold, triggering additional tax.

8. Are catch-up contributions affected by DIV 293?

Yes, if your total concessional contributions, including catch-up amounts, push your income above the $250,000 threshold, DIV 293 may apply. Careful planning is required to use catch-up contributions effectively without incurring extra tax.

9. What happens if I ignore DIV 293 planning?

Failing to plan for DIV 293 can result in paying unnecessary tax, reduced retirement savings, and potential administrative issues with the ATO. Proactive planning helps avoid costly mistakes.

10. Who can help me with DIV 293?

An accredited SMSF accountant or superannuation adviser can review your contributions, forecast DIV 293 exposure, and recommend strategies to minimise extra tax while remaining compliant.