What is Division 293 tax for high income earners in Australia 2026?
Division 293 tax is an additional 15% tax on superannuation contributions for high-income earners in Australia. It aims to reduce the tax concession on contributions once an individual's income and concessional contributions exceed a set threshold, which is indexed annually.
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How it works in practice
Understanding Division 293 Tax
Division 293 tax is an additional tax on superannuation contributions that applies to individuals whose combined income and concessional super contributions exceed a certain threshold. Introduced to ensure a fairer superannuation system, it effectively halves the tax concession on these contributions for high-income earners, bringing the total tax on these contributions to 30% (15% standard contributions tax + 15% Division 293 tax).
Who it Affects
Currently, Division 293 tax applies to individuals with an "income for surcharge purposes" (which includes your taxable income, reportable fringe benefits, and net investment losses) plus your low tax contributions, exceeding $250,000 for the 2023-24 financial year. The threshold has been indexed in previous years and is subject to future indexing, meaning the principles of the tax are expected to continue through 2026 and beyond, with the specific threshold amount potentially changing.
How it Works
The tax is levied on the lower of your concessional super contributions or the amount by which your income and contributions exceed the threshold. For example, if your total income and concessional contributions are $270,000, and the threshold is $250,000, the Division 293 tax would apply to $20,000 of your concessional contributions. The ATO will issue an assessment notice if you are liable.
Important exceptions
This tax only applies if your combined income and concessional super contributions exceed the current threshold, which is $250,000 for 2023-24. It does not apply to non-concessional contributions or to individuals whose income for surcharge purposes is below the threshold. The tax is also not applied to contributions that exceed your concessional contributions cap, as those excess amounts are taxed differently. If you are eligible for the defined benefit superannuation scheme, specific rules apply to how your contributions are calculated for Division 293 purposes, which may differ from accumulation funds. Additionally, the threshold is indexed, so it may change in future financial years like 2026.
What you should do now
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Understand the income threshold for Division 293 tax for the relevant financial year, noting it is indexed.
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Monitor your taxable income, reportable fringe benefits, net investment losses, and concessional super contributions annually.
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Upon receiving an ATO Division 293 assessment, review it carefully and consider how to pay (from super or personal funds).
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If you have a defined benefit super fund, understand how your 'notional taxed contributions' are calculated for this tax.
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Seek professional financial advice if your income approaches the threshold or if you receive an assessment to manage your super contributions effectively.
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