Division 293 tax explained, and where the new high-balance super tax fits
How the extra 15% Division 293 tax on super contributions works above $250,000 of income, a worked example, how to pay it, and the status of the separate Division 296 tax.
Division 293 tax is an extra 15% tax on concessional super contributions for people whose combined income and concessional contributions exceed $250,000 in an income year. It doubles the tax on those contributions from 15% to 30% for the affected amount. The ATO calculates it after you lodge your return and sends a separate Division 293 notice of assessment. Even at 30%, concessional contributions are still taxed below the 47% top marginal rate (including Medicare levy), so salary sacrifice usually still saves tax for high earners; the saving is just smaller.
A different, newer measure, often called Division 296 or the "$3 million super tax", targets earnings on very large super balances. It was legislated in March 2026 and applies from the 2026–27 income year. Both are explained below as general information.
How Division 293 is calculated
Two numbers matter:
- Income for Division 293 purposes: broadly your income for Medicare levy surcharge purposes (taxable income, reportable fringe benefits and total net investment losses) but excluding reportable super contributions.
- Low tax contributions: your concessional contributions for the year that are within your cap (excess concessional contributions are dealt with separately).
If (1) + (2) is more than $250,000, Division 293 tax is 15% of the lesser of:
- your low tax contributions, or
- the amount by which (1) + (2) exceeds $250,000.
Worked examples (illustrative, 2026–27)
| Person | Income for Div 293 | Concessional contributions | Combined | Excess over $250,000 | Taxed amount | Div 293 tax |
|---|---|---|---|---|---|---|
| A | $230,000 | $27,600 | $257,600 | $7,600 | $7,600 (the lesser) | $1,140 |
| B | $260,000 | $30,000 | $290,000 | $40,000 | $30,000 (the lesser) | $4,500 |
| C | $215,000 | $25,800 | $240,800 | – | – | Nil |
Person A shows why people with income below $250,000 can still pay it: the contributions themselves push the combined figure over the line. Person B has income over the threshold, so all of their concessional contributions are taxed at the extra 15%.
Is salary sacrifice still worth it?
For someone above the threshold, compare the tax on salary with the tax on a concessional contribution.
| Taken as salary (2026–27, over $190,000) | Contributed to super, Div 293 applies | |
|---|---|---|
| Rate | 45% + 2% Medicare levy = 47% | 15% contributions tax + 15% Div 293 = 30% |
| On $10,000 | $4,700 tax | $3,000 tax |
| Net | $5,300 in hand | $7,000 in super |
The difference is still $1,700 per $10,000, but the money is preserved until you meet a condition of release. For someone on a 39% marginal rate who is caught by Division 293 because of contributions, the gap narrows to 9 cents per dollar. Test your own numbers with the salary sacrifice calculator, entering your marginal rate minus the extra 15% as a rough guide.
Paying the Division 293 assessment
- The ATO issues a separate notice, usually some months after your return is processed.
- You can pay it personally by the due date on the notice, or elect to release the amount from a super fund using the release authority the ATO provides. The release election has time limits, so act once the notice arrives.
- Members of certain defined benefit funds may have the tax recorded in a debt account that is paid when benefits are taken.
- The tax is not deductible, and late payment attracts the general interest charge.
If your income fluctuates, for example because of a one-off capital gain, you can be caught in one year only. Carry-forward concessional contributions used in that year also count as low tax contributions, which can increase the Division 293 bill. See carry-forward concessional contributions.
The separate Division 296 tax on large balances
Division 296 is aimed at individuals whose total super balance exceeds $3 million. It is a tax on a share of the earnings attributable to the part of the balance above that level, assessed to the individual rather than the fund.
- It was first announced in 2023, then significantly redesigned in October 2025. The redesign moved to realised earnings (rather than unrealised gains), indexed the $3 million threshold and added a higher tier for balances above $10 million.
- The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 (assented 13 March 2026) inserted Division 296 into the Income Tax Assessment Act 1997 from the 2026–27 income year. The large balance threshold is $3 million and the very large balance threshold $10 million for 2026–27, both indexed from 2027–28.
- Under the companion Imposition Act, the tax is 15% of the share of earnings attributable to the balance above $3 million, plus a further 10% of the share attributable to the balance above $10 million. Added to the fund's own 15% tax, that is an effective rate of about 30% and 40% on those slices of earnings. For 2026–27 the test uses your total super balance at the end of the year; the tax cannot be deducted, and assessments follow after funds report earnings for the year.
Who should get advice
Division 293 is mechanical and can be estimated with the formula above. Advice is worthwhile if you are a defined benefit member, have income from a trust or company that varies a lot, are considering large carry-forward contributions in a high-income year, or have a balance anywhere near $3 million.
FAQ
Is Division 293 taken from my fund automatically?
No. You receive the notice personally. You choose to pay it or to release money from super to pay it.
Does a capital gain count toward the $250,000?
Yes. A net capital gain is part of taxable income, so a large gain can push you over the threshold in that year.
Are excess concessional contributions included?
No. Excess concessional contributions are taxed at your marginal rate instead, and they are not low tax contributions for Division 293.
Does Division 293 apply to non-concessional contributions?
No. It only applies to concessional (pre-tax) contributions.
Sources
- Australian Taxation Office — Division 293 tax on concessional contributions by high-income earners; new legislation pages
- The Treasury — announcements and consultation on the large-balance super tax
- Federal Register of Legislation — Income Tax Assessment Act 1997 Division 293 and later Acts
Related: super contribution caps, income tax rates, salary sacrifice worked example.
