James is 47, an investment banker in North Sydney on a $320,000 package. He lodged his return in August, got his refund, and moved on. Six weeks later a second letter arrived from the ATO: a Division 293 notice of assessment for $4,875, due in 21 days. No error, no audit — just a tax most people have never heard of until the year they earn enough to pay it.
Division 293 in four lines:
- Who: income + concessional super contributions above $250,000 (threshold unchanged since 2017, not indexed)
- What: an extra 15% on the lesser of your concessional contributions or the amount above $250,000
- Most you can pay in 2026–27: $4,875 (15% of the $32,500 contributions cap)
- When: billed separately, after your return is processed — 21 days to pay, or elect to release the money from super
Check your exposure — the calculator flags Division 293 automatically → Salary Sacrifice Calculator
What Division 293 Is — and What It Isn't
Concessional super contributions are normally taxed at a flat 15% inside your fund — a deliberate concession against marginal rates of up to 47%. Division 293's logic is that the concession is too generous at the top: once your income passes $250,000, the government claws back another 15%, so your contributions are effectively taxed at 30%. Still cheaper than your marginal rate — more on that below — but no longer half price.
Don't confuse it with Division 296, the new tax on super earnings above a $3 million balance that took effect on 1 July 2026. Division 293 is about your income and contributions this year; Division 296 is about the size of your balance. A high earner with an average balance pays 293 and not 296 — we've covered Division 296 separately.
How the ATO Works Out Your Bill
The ATO builds a number called Division 293 income: your taxable income, plus reportable fringe benefits, plus net investment and rental property losses (yes, negative gearing losses are added back), plus certain family trust distributions — plus your concessional contributions (employer super, salary sacrifice, and personal deductible contributions). If the total tops $250,000, the tax is:
15% × the lesser of (your concessional contributions) and (the amount above $250,000)
| Example (2026–27) | Just over: $260k salary | Well over: James at $320k |
|---|---|---|
| Taxable income | $260,000 | $300,000 |
| Concessional contributions | $31,200 (employer) | $32,500 (cap) |
| Division 293 income | $291,200 | $332,500 |
| Amount above $250,000 | $41,200 | $82,500 |
| Taxed amount (the lesser) | $31,200 | $32,500 |
| Division 293 tax (15%) | $4,680 | $4,875 |
The "lesser of" rule protects people just over the line: at $255,000 of Division 293 income, only $5,000 sits above the threshold, so the bill is 15% × $5,000 = $750 — not 15% of everything you put into super. The bill scales up until your whole contribution amount is above the line, then flat-tops at $4,875 for 2026–27.
Enter your income and sacrifice amount — the calculator flags Division 293 exposure automatically and nets it out of your tax saving.
The Bill Arrives After Your Refund — Don't Sit on It
Division 293 isn't part of your normal assessment. The ATO waits for your return and your fund's contribution reporting, then issues a separate notice of assessment — often weeks or months after you've mentally closed the books on tax season. Right now, in the July–October lodgement window, is exactly when these letters start landing. You then have two ways to pay:
- Pay it personally within 21 days — the default due date on the notice.
- Release it from super: within 60 days you can lodge a release authority election, directing your fund to pay the ATO (the fund has 30 days to act). Your take-home is untouched; your retirement balance wears it.
Should You Still Salary Sacrifice Above $250k?
Almost always yes — and here's the misconception to clear first. Salary sacrifice does not reduce your Division 293 income. The calculation deliberately excludes reportable super contributions from the income side and adds them on the contributions side — so every dollar you sacrifice leaves the $250,000 test exactly where it was. You cannot sacrifice your way out of Division 293.
But you don't need to. With Division 293, contributions are taxed at an effective 30%. Your alternative — taking the money as salary — is taxed at 47% (45% plus the 2% Medicare levy). That's still a 17-cents-per-dollar saving on every dollar contributed within the $32,500 cap. On James's numbers, filling the cap costs him $4,875 in Division 293 tax but saves roughly $5,500 more than taking the same dollars as salary. Division 293 narrows the concession; it doesn't kill it.
The Threshold That Never Moves
Division 293 started in 2012 with a $300,000 threshold, dropped to $250,000 on 1 July 2017 — and has been frozen there since, with no indexation in the law. Meanwhile wages have grown every year, so each year the tax quietly reaches further down the income scale. The take: if you're on $220,000–$240,000 with a bonus, investment property losses (added back, remember) or reportable fringe benefits, run the numbers before assuming this is someone else's tax.