Division 293 Tax Calculator Australia

How Division 293 tax works

Division 293 is a tax that takes back some of the tax concession high-income earners get on their concessional super contributions. Inside super, contributions are taxed at 15% rather than your marginal tax rate (the “contributions tax”). For a top-bracket earner that is a 30 percentage-point saving on every dollar contributed. Div 293 closes part of that gap by adding an extra 15% to the contributions of high earners, bringing the effective tax to 30% on the affected slice.

The trigger is straightforward but the “income” definition is broader than your tax return's taxable income. ATO uses Division 293 income, which adds reportable fringe benefits, reportable employer super contributions, net financial investment losses, net rental property losses, and amounts where family trust distributions tax was paid. For most salary earners who don't have heavy investment-loss or trust complexity, taxable income is a reasonable proxy. The calculator uses taxable income directly and the FAQ flags the corner cases.

The math, without the legalese

1. Add your taxable income and your concessional contributions for the FY.
2. If the total is at or below $250,000, Div 293 does not apply.
3. If above, the excess is the gap between the total and $250,000.
4. Div 293 tax = 15% multiplied by the LESSER of your concessional contributions or the excess.

The “lesser of” rule matters because it caps Div 293 tax at 15% of your concessional contributions. You can't pay more in Div 293 than the contributions you actually made, even if your other income is enormous.

Worked example one: full-trigger high earner

Priya is a senior engineer with $260,000 in taxable income. Her employer pays 12% SG ($31,200, capped at the maximum contributions base) plus she salary-sacrifices $0 because she uses non-super investing. Concessional contributions = $31,200. Combined income = $260,000 + $31,200 = $291,200. Excess over the $250,000 threshold = $41,200.

Taxable amount = lesser of ($31,200 CCs, $41,200 excess) = $31,200. Div 293 tax = 15% of $31,200 = $4,680. Effective tax on her concessional contributions = 15% standard + 15% Div 293 = 30%. The ATO will issue Priya a separate Div 293 assessment after she lodges her tax return; she can elect to release the tax from her super fund or pay it from outside super.

Worked example two: partial trigger near the threshold

Marcus earns $230,000 taxable. His employer SG is $27,600 and he salary-sacrifices $2,400 to top up to the $30,000 concessional cap. Combined income = $230,000 + $30,000 = $260,000. Excess over threshold = $10,000.

Taxable amount = lesser of ($30,000 CCs, $10,000 excess) = $10,000. Div 293 tax = 15% of $10,000 = $1,500. Effective tax on the $30,000 in CCs = 15% standard + 5% Div 293 = 20%. Note Marcus wasn't penalised on his full $30,000 in concessional contributions, only on the slice that pushed him over the threshold. This is why people right at the threshold often shouldn't reduce their salary sacrifice on the assumption Div 293 wipes the tax benefit.

Who gets hit hardest

Because the $250,000 threshold is fixed and concessional caps index occasionally, an increasing share of full-time professionals cross the threshold each year. Treasury data on Division 293 assessments has shown growing case volumes, with most affected taxpayers earning between $250,000 and $400,000 in Division 293 income. Specialist medical practitioners, senior IT and finance professionals, and partners in professional services firms dominate the assessed cohort.

People at the very top of the income distribution often pay relatively little Div 293 in absolute terms, because they hit the $30,000 concessional cap regardless and the lesser-of rule means their Div 293 tax is capped at 15% of the cap, around $4,500 per year. The harder cases are at the lower end of the trigger zone, where partial triggers create complex marginal-cost calculations on each extra dollar of salary sacrifice.

Paying the assessment: in-fund vs out-of-fund

When the ATO issues a Div 293 assessment, you have two payment options. Option one is a release authority: you authorise your super fund to pay the tax directly out of your super balance. Option two is paying from outside super, leaving the contribution intact in the fund. Both are legitimate; the choice depends on cash flow and whether you want to preserve the inside-super balance.

The release-authority path is administratively simpler but permanently shrinks the in-super balance by the Div 293 amount (plus any subsequent investment loss on those dollars). Paying from outside super preserves the compounding base, which over a 30-year FIRE horizon adds up to meaningfully more terminal wealth even with the upfront cash flow cost. The full ProjectFi planner models both paths year by year so the trade-off is visible rather than felt.

Strategic considerations

Even with Div 293 applied, salary sacrificing usually still beats taking the income as cash and investing outside super, because:

• The 30% effective rate inside super (with Div 293) is still lower than the 47% top marginal rate (45% + 2% Medicare).
• Earnings inside super are taxed at 15% during accumulation and 0% in pension phase, vs your marginal rate outside super.
• The contributions also reduce your taxable income, lowering your overall income tax bill.

That said, FIRE planners who want pre-preservation-age accessible wealth often DO favour non-super investing despite the higher tax. The trade-off is preservation flexibility, not just tax efficiency. The full ProjectFi planner models both sides side by side across your full FIRE horizon.

Sources and references

ATO published reference: Division 293 tax. The threshold is set in the Income Tax Assessment Act 1997 Div 293-25 and has been $250,000 since the 2017-18 amendment.

Want to see Div 293 modelled across your full FIRE plan with year- by-year salary growth and indexed concessional caps? The ProjectFi planner handles it automatically.