Division 293

What is Division 293 Tax?

Division 293 is a tax introduced by the Australian Taxation Office (ATO) to ensure high-income earners contribute more fairly to the superannuation tax system. It applies an additional tax of 15% on certain superannuation contributions made by individuals whose income and concessional contributions exceed a set threshold.

This means that eligible concessional contributions could be taxed at 30% instead of the standard 15%.

Who is Affected by Division 293?

Division 293 targets high-income earners whose total income and concessional super contributions exceed:

• $250,000 income per year, and

• $27,500 in concessional contributions per year (current cap)

Concessional contributions include:

• Employer super guarantee contributions

• Salary sacrifice contributions

• Personal deductible contributions

Even if your income is below $250,000, you may still be liable for Division 293 tax if adding your concessional contributions takes your total over the threshold.

How is Division 293 Tax Calculated?

The additional tax is calculated at 15% of the lesser of:

• Your concessional contributions, or

• The amount your income exceeds the $250,000 threshold

Example:

Let’s say your total income is $300,000 and you make $32,500 in concessional super contributions.

Only $27,500 of those contributions are counted within the cap. The Division 293 tax is calculated as:

$27,500 × 15% = $4,125

You will pay an extra $4,125 in tax on your concessional contributions.

How is Division 293 Tax Paid?

You have two options:

1. Pay the tax personally once you receive a notice from the ATO.

2. Elect for your super fund to pay the Division 293 liability using the Release Authority issued by the ATO.

It's important to act promptly, as delays could result in interest or penalties.

Planning Ahead: Should You Worry About Division 293?

If your income regularly sits near or above the $250,000 threshold, Division 293 will likely affect you. It’s not avoidable, but with proper tax planning, you can:

• Optimise how and when you make concessional contributions

• Consider alternative investment structures

• Avoid breaching the cap and incurring excess contribution tax

Speak to an Expert

Division 293 is a complex tax issue that affects high-income Australians. If you’re unsure whether it applies to you or want to understand how to minimise its impact, contact Dolman Bateman today. Our expert tax advisors can guide you on the best strategy for your unique situation.

📞 Call us on (02) 9411 5422

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.