← Back to blog

Division 293 tax: Avoid 21 day cash shocks for high income Australians

Cash prepared for a Division 293 tax payment

Division 293 tax is an extra 15% tax on certain concessional super contributions if your combined Division 293 income and concessional contributions exceed $250,000 in an income year. If you are assessed, the ATO sends you a notice, payment is due within 21 days, and you can elect within 60 days to release the money from your super instead of paying it personally. Check your myGov inbox, confirm your fund reported your contributions correctly, and plan your cash flow before the deadline arrives.

TL;DR:

  • Most high earners near the $250,000 threshold should project their income and contributions early to adjust salary sacrifice or avoid exceeding the limit.
  • Division 293 tax is calculated based on a combination of taxable income, fringe benefits, and investment losses, not just salary, which may cause surprises.
  • The assessment process involves matching your tax return with super fund reports, often delaying notices and creating cash-flow surprises.
  • You must pay the assessed tax within 21 days or elect within 60 days for the fund to release the amount, but the election does not extend the deadline.
  • Modeling scenarios beforehand helps determine whether paying personally or releasing from super minimizes your tax impact and cash flow issues.
Aerowealth
Model Your Retirement Tax Scenarios
Compare superannuation, property and mortgage decisions to understand how Division 293 exposure may affect your broader financial future.
Explore AeroWealth

Table of Contents

How Division 293 tax is calculated

The calculation starts with what the ATO calls Division 293 income, which borrows heavily from the Medicare levy surcharge income test. It is not simply your salary. It pulls in several other income sources that many high earners forget to account for when estimating their exposure.

  • Taxable income: your standard assessable income after deductions.
  • Reportable fringe benefits: benefits your employer reports on your income statement.
  • Net investment losses: rental property and share losses added back, not subtracted.
  • Certain super lump sums and other items specific to the Division 293 income test.

On the contributions side, the tax applies to concessional contributions, which include employer superannuation guarantee payments, salary sacrifice amounts, and deductible personal contributions. Excess concessional contributions that have already been taxed at your marginal rate are disregarded for Division 293 purposes, so you are not taxed twice on the same dollar.

Defined benefit members are treated differently again. Their contributions are measured as notional contributions calculated under specific regulations rather than the actual amounts paid into the fund, which can shift both the size and the timing of any Division 293 liability. The Treasury’s explanatory materials set out how these notional contribution rules work in practice.

Illustration comparing contribution measurement paths

Who pays and what the threshold looks like

Division 293 tax applies once your income plus concessional contributions crosses the relevant threshold, and the mechanics are fairly simple once you know where you sit.

  • The threshold has been $250,000 from the 2017-18 income year onwards; it was $300,000 in some earlier years.
  • The tax rate is 15% of your Division 293 taxable contributions, calculated as the lesser of your excess over the threshold or your concessional contributions for the year.
  • Special treatments apply to state higher-level office holders and members of constitutionally protected funds, and defined benefit members follow the notional contribution method described above rather than straightforward cash contributions.

Most PAYG employees will find their liability is driven by salary sacrifice arrangements pushing them just over the line, which makes year-end projections worth doing before your fund locks in its reporting.

How the ATO notifies you and why timing lags

The ATO cannot assess your Division 293 liability until it has two separate pieces of information: your tax return and your super fund’s contribution report. Because these arrive on different schedules, there is often a real gap between when you lodge and when the notice appears.

  • The ATO issues an Additional tax on concessional contributions (Division 293) notice once both data sets are matched.
  • Advisers note that Division 293 assessments often arrive well after standard tax processing because they depend on fund reporting as well as your return.
  • Check your myGov inbox regularly, make sure your registered tax agent has authority to receive ATO correspondence on your behalf, and query your fund directly if you suspect a reporting error.

This lag is the single biggest source of cash-flow surprise for people who assume the matter is closed once their return is lodged.

Paying Division 293 tax: options and the release authority process

Once the notice arrives, the clock starts immediately, and the two-stage nature of the process catches many people out.

  1. Pay the assessed amount personally within 21 days of the notice of assessment.
  2. Alternatively, elect within 60 days to have the amount released from your super fund instead of paying from personal cash.
  3. Once you elect, the ATO issues a Release Authority to your nominated fund, and only then can the fund pay.
  4. SMSF trustees must wait for that formal Release Authority and follow SuperStream requirements where applicable before releasing any money.

The critical detail advisers flag repeatedly: the 60-day election window does not extend the 21-day payment due date, so many people pay personally first and get reimbursed once the release authority comes through. Paying from an SMSF before the Release Authority arrives can be treated as illegal early access to superannuation and may attract penalties, so the correct sequence matters more than speed.

Pro Tip: Set aside cash to pay personally within the 21-day window even if you plan to elect release from super, since the release authority rarely arrives in time to meet the original deadline.

Practical planning steps to manage your liability

You cannot eliminate Division 293 tax entirely if your income sits well above the threshold, but you have real levers to pull before the end of the financial year.

  • Project your combined income and concessional contributions early and adjust salary sacrifice amounts if you are tracking close to $250,000.
  • Compare salary sacrifice against after-tax contributions to see which structure leaves you better off once Division 293 is factored in.
  • Review your contribution caps so you are not accidentally triggering both Division 293 and excess contributions issues in the same year.
  • Consider spouse contributions or non-concessional strategies where they fit your broader plan, respecting the non-concessional contributions cap along the way.

Pro Tip: Run the numbers both ways, paying personally versus releasing from super, before you decide. The cash-flow difference is often larger than people expect once reimbursement timing is factored in.

Worked numeric example of the calculation

Say your taxable income is $220,000, plus $15,000 in reportable fringe benefits, giving Division 293 income of $235,000. Add $20,000 in concessional contributions (employer super plus salary sacrifice), and your combined total is $255,000, which is $5,000 over the $250,000 threshold.

  1. Calculate the excess over the threshold: $255,000 minus $250,000 equals $5,000.
  2. Compare that to your concessional contributions of $20,000.
  3. Take the lesser figure, $5,000, as your Division 293 taxable contributions.
  4. Apply the 15% rate: $5,000 times 15% equals $750 payable.

Small differences in what your fund reports, or a late-lodged reportable fringe benefit, can shift this result, so the figures your employer and fund submit matter as much as your own return.

If you disagree with your assessment

Before disputing anything, confirm the numbers your fund reported match what actually landed in your account.

  • Ask your super fund to check its contribution report and correct any error; the fund must fix its report before the ATO can recalculate your assessment.
  • Gather payslips, contribution confirmations, and fund statements as evidence if you plan to formally dispute the figures.
  • Lodge a formal objection with the ATO only after verification, since objections based on unverified assumptions rarely succeed.
  • Involve a tax agent once the numbers are confirmed incorrect. Informal phone calls to the ATO will not correct fund-reported data.

Modeling Division 293 outcomes before they hit your bank account

You can build side-by-side scenarios comparing paying Division 293 tax personally against electing to release the amount from your super, then stress-test both against your broader cash flow. Rather than guessing whether a $750 or $7,500 liability will strain your finances the month it lands, you can model the timing gap between assessment and release authority directly. That makes the decision between trimming next year’s salary sacrifice and simply accepting the tax a clearer one.

Comparison of Division 293 payment scenarios

What advisers see in practice

We have watched clients get caught out by the gap between lodging a tax return and receiving a Division 293 notice more than once. Model your scenarios early, and get professional advice before the notice lands, not after.

— Aerowealth Team

Model your Division 293 exposure before the notice arrives

Aerowealth

Working out whether you will owe Division 293 tax, and how it will affect your cash flow, is exactly the kind of multi-variable question spreadsheets struggle with. The tool builds side-by-side scenario comparisons and stress tests so you can see how salary sacrifice adjustments, contribution timing, or accepting the tax outright each play out against your retirement plan, without needing to rebuild your model every time your numbers change.

  • Compare paying Division 293 tax personally versus electing release from super across your actual income and contribution figures.
  • Stress-test how a delayed assessment notice affects your short-term cash flow alongside your other financial goals.
  • Start on the Free plan or move to Pro at $7 AUD per month for expanded scenario planning and a higher AI assistant quota.

None of this replaces a conversation with a tax adviser about your specific assessment, but it gives you the numbers to bring to that conversation. Model your own numbers on AeroWealth before your next notice arrives.

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

Sources

FAQ

Can I avoid Division 293 tax?

You cannot avoid Division 293 tax outright if your income and concessional contributions exceed the $250,000 threshold, but you can manage your exposure. Adjusting salary sacrifice levels or timing personal deductible contributions before year-end can keep you closer to or under the threshold.

What is the Division 293 threshold for 2026?

The threshold remains $250,000, the same figure that has applied since the 2017-18 income year. There is no separate higher threshold announced for the 2026 income year.

What is the point of Division 293 tax?

Division 293 tax reduces the tax concession that high-income earners receive on concessional super contributions. It brings the effective tax rate on those contributions closer to what a high earner would otherwise pay, by adding an extra 15% on top of the standard 15% contributions tax already paid inside the fund.

Is Division 293 tax compulsory?

Yes, if you are assessed, payment of Division 293 tax is compulsory and due within 21 days of your notice of assessment. What is optional is the source of the payment. You can pay personally or elect within 60 days to have the amount released from your super fund instead.

← Back to blog