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.
Table of Contents
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
- Use Concessional Contribution Cap Wisely: Keep contributions below the annual concessional cap ($27,500 for 2025/26) to avoid triggering additional tax.
- Monitor Salary Sacrifice and Employer Contributions: Track these contributions carefully to remain under the threshold.
- Consider Spreading Contributions Across Financial Years: If possible, splitting contributions across years can reduce division 293 exposure.
- Check for Catch-Up Contributions: Individuals with unused concessional cap space can utilise it strategically without exceeding thresholds.
- 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
What is DIV 293?
DIV 293, also known as Division 293 tax, is an additional tax applied to concessional superannuation contributions for individuals with higher incomes. It is designed to reduce the tax advantage that high-income earners receive when contributing to super, by effectively increasing the tax rate on those contributions from 15% to 30%.
This additional tax applies when your combined income and concessional contributions exceed the threshold of $250,000 in a financial year. The standard 15% contributions tax is still applied within the super fund, but Division 293 adds a further 15% on top, resulting in a total tax rate that aligns more closely with higher marginal tax rates.
Understanding how this tax works is important for individuals with higher incomes, as it can significantly impact the overall tax efficiency of their superannuation strategy.
Who is affected by Division 293?
Division 293 tax primarily affects high-income earners whose total income exceeds $250,000 in a financial year. This total income is broadly defined and includes not just salary and wages, but also bonuses, reportable fringe benefits, investment income, and concessional super contributions.
Both employees and self-employed individuals can be subject to this tax if their combined income and contributions exceed the threshold. Importantly, even if your base salary is below $250,000, additional income streams or higher super contributions can push you over the limit.
Because of this, individuals with multiple income sources or variable earnings need to pay close attention to their total financial position to understand whether Division 293 may apply.
Which contributions are subject to Division 293?
Division 293 applies specifically to concessional contributions, which are contributions made to your super fund before tax. These include employer super guarantee contributions, salary sacrifice arrangements, and personal contributions for which you claim a tax deduction.
Since these contributions are already taxed at a concessional rate of 15% within the super fund, Division 293 effectively imposes an additional 15% tax on the portion of contributions that fall within the relevant threshold. This ensures that the total tax applied to these contributions is closer to the rate paid by higher-income earners outside of super.
It is important to understand which contributions are included, as accumulating these across multiple sources can affect whether you are liable for Division 293 tax.
How can I reduce DIV 293 liability?
Reducing your Division 293 liability involves careful planning of both your income and your superannuation contributions. By monitoring your total income throughout the financial year, including all sources such as salary, bonuses, and investment returns, you can better anticipate whether you are approaching the $250,000 threshold.
Timing contributions can also play a role, as adjusting when contributions are made may help manage your position within a given financial year. Consolidating multiple super accounts can make it easier to track concessional contributions and avoid duplication or errors that could increase your exposure to additional tax.
For many individuals, the most effective approach is to seek professional advice from an SMSF accountant or financial adviser who can provide tailored strategies that optimise contributions while remaining compliant with tax rules.
Does DIV 293 apply automatically?
Yes, Division 293 tax is applied automatically by the Australian Taxation Office based on the information it receives from your tax return and superannuation funds. The ATO calculates whether your combined income and concessional contributions exceed the threshold and then issues an assessment outlining any additional tax payable.
You will typically receive a notice from the ATO informing you of your Division 293 liability, along with options for how the tax can be paid. In many cases, you can choose to pay the liability personally or elect to have the amount released from your super fund.
While the process is automated, it is still important to understand how the tax is calculated so you can anticipate potential liabilities and plan accordingly.
Can multiple super accounts affect DIV 293?
Yes, having multiple super accounts can increase the risk of being subject to Division 293 tax, particularly if you are not actively monitoring contributions across each fund. The ATO aggregates all concessional contributions made to your various super accounts when calculating your total for the financial year.
This means that employer contributions, salary sacrifice amounts, and personal deductible contributions across different funds are all combined when determining your liability. If you are unaware of contributions being made to multiple accounts, you may exceed thresholds without realising it.
Consolidating super accounts or regularly reviewing contributions can help you maintain better control and reduce the likelihood of unexpected tax outcomes.
How does salary sacrifice impact DIV 293?
Salary sacrifice contributions are included as concessional contributions and therefore play a direct role in determining whether Division 293 tax applies. While salary sacrificing into super can be an effective way to reduce your taxable income, it also increases your total concessional contributions, which are factored into the Division 293 calculation.
If these contributions cause your combined income and contributions to exceed the $250,000 threshold, they can trigger additional tax liability. This creates a situation where a strategy designed to reduce tax in the short term may result in an additional tax obligation under Division 293.
Careful planning and monitoring of salary sacrifice arrangements are essential to ensure they continue to deliver the intended benefits without unintended tax consequences.
Are catch-up contributions affected by DIV 293?
Yes, catch-up contributions can influence your exposure to Division 293 tax. These contributions allow individuals to utilise unused concessional contribution caps from previous years, enabling larger contributions in a single financial year.
While this can be beneficial for boosting super balances, it can also significantly increase your total concessional contributions in that year. If combined with your other income, this may push you above the $250,000 threshold and trigger Division 293 tax.
As a result, individuals considering catch-up contributions should carefully assess their total financial position and seek professional advice to ensure they understand the potential tax implications before proceeding.
What happens if I ignore DIV 293 planning?
Failing to plan for Division 293 tax can lead to several negative financial outcomes, particularly for high-income earners. Without proactive management, you may unintentionally exceed thresholds and incur additional tax liabilities that could have been minimised with proper planning.
This can result in reduced after-tax returns on your super contributions and may also create administrative complexity when dealing with ATO assessments. In some cases, ignoring Division 293 considerations can lead to missed opportunities to structure contributions more effectively or to adjust income timing strategies.
By taking a proactive approach, you can better manage your tax exposure and ensure your superannuation strategy remains efficient and aligned with your long-term goals.
Who can help me with DIV 293?
Managing Division 293 tax effectively often requires specialist knowledge of superannuation and tax law. Accredited SMSF accountants and financial advisers can provide tailored guidance based on your individual income, contribution levels, and financial objectives.
These professionals can help forecast your potential Division 293 exposure, recommend strategies to minimise additional tax, and ensure that your contributions remain compliant with ATO regulations. They can also assist in interpreting ATO assessments and managing any associated liabilities.
Working with an experienced adviser provides confidence that your superannuation strategy is both compliant and optimised for long-term financial success.