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What Is Division 293? And How Does It Affect Me as a HENRY?

  • Hugh at The Henry Desk
  • Jul 7
  • 4 min read

You did everything right. You earn well, you salary sacrifice into super, you let the system do its job. Then, sometime next year, a notice quietly appears in your myGov inbox: an extra tax bill of a few thousand dollars, for income you earned twelve months ago.


Welcome to Division 293, the tax most high earners don't know exists until it sends them a bill.



What Division 293 actually is

Division 293 is an additional 15% tax on concessional (before-tax) super contributions, applied to people the tax system considers high-income earners.


When you put money into super as a concessional contribution, it's taxed inside your fund at a flat 15%. For someone on an average wage, that's a modest discount on their marginal rate. But for someone paying the top marginal rate of 47% (including the Medicare levy), getting taxed at just 15% is an enormous concession.


Division 293 narrows that gap. It adds a second 15% tax on top of the standard 15% contributions tax, lifting the effective rate on the affected contributions to 30%. That's still well below the 47% you'd pay if the money landed in your pay packet so the concession survives, it just shrinks.


The threshold: $250,000 (and why that matters)

Division 293 kicks in when your combined "Division 293 income" plus your concessional super contributions exceed $250,000 in a financial year.


Two things every HENRY should sit with:

  1. The threshold hasn't moved since 1 July 2017. It isn't indexed to inflation or wage growth. Every year, ordinary pay rises push more people over a line that never moves — classic bracket creep. A salary that felt comfortably mid-range a few years ago can now clear it.

  2. "Division 293 income" is not the same as your taxable income. It's a broader figure that adds back things like reportable fringe benefits, net investment losses (think negatively geared property), and certain other items. So you can be under $250,000 on your tax return and still be caught in the net.


How it's calculated

You're taxed 15% on the lesser of two numbers:

  • the amount by which your income-plus-contributions exceeds $250,000, or

  • your concessional contributions for the year.

The "lesser of" rule is what makes the tax phase in gradually near the threshold, rather than hitting your whole contribution the moment you cross it.


Example 1 — Maya, fully over the line. Maya has a taxable income of $260,000 and $30,000 of concessional contributions (the cap for 2025–26).

  • Combined: $290,000

  • Excess over $250,000: $40,000

  • Concessional contributions: $30,000

  • Tax applies to the lesser ($30,000): 15% × $30,000 = $4,500


Example 2 — Jan, just over the line. Jan has a taxable income of $240,000 and $15,000 in contributions.

  • Combined: $255,000

  • Excess over $250,000: $5,000

  • Concessional contributions: $15,000

  • Tax applies to the lesser ($55,000): 15% × $5,000 = $750


Note: contributions above the concessional cap (the cap is $30,000 in 2025–26) are not caught by Division 293. Excess contributions are already taxed at the marginal rate, so they sit outside this system entirely.


Why HENRYs get blindsided

This tax has a particular talent for catching exactly the people in the accumulation phase:

  • It's invisible in your payslip. Your employer's PAYG withholding doesn't account for it. Nothing in your regular pay signals it's coming.

  • It arrives late. The ATO can only assess it after it has both your tax return and your fund's contribution data — typically well after the financial year ends. The bill can land long after you've mentally closed the books on that income.

  • One-off income tips you over. A performance bonus, a tranche of RSUs vesting, a capital gain on selling shares or a property — any of these can push an otherwise sub-threshold year over $250,000 without warning.

  • The threshold doesn't move, but your income does. Each pay rise quietly increases the odds.


What you can actually do about it

You usually can't make Division 293 disappear, but you're not powerless either:

  • Reframe it before you over-react. A 30% effective rate inside super still beats 47% in your hands. For most high earners, salary sacrificing remains worthwhile just less dramatically so. Stopping contributions to "avoid" Division 293 often costs you more than the tax does.

  • Choose how to pay it. When the notice arrives, you can pay from your own cash, or elect to release the amount from your super fund using the ATO's form.

  • Mind the timing of big one-offs where you have any control. For example, which financial year a discretionary bonus or asset sale falls into.

  • Consider household structuring. Spouse contributions and contribution splitting can shift where contributions land. (Whether this helps depends entirely on your circumstances.)

  • Don't accidentally blow the cap. Going over the $30,000 concessional cap creates a separate, often worse, headache. If you've got unused cap from prior years, the carry-forward rules may let you contribute more but model it first.


These are levers, not prescriptions. Which ones apply to you depends on your full picture, and that's a conversation for a licensed adviser and your tax agent.


Division 293 is the price of admission for high earners using super's biggest tax break. It's modest, it's mostly unavoidable once you're over the threshold, and it's almost never a reason to stop contributing. The real cost isn't the 15%, it's being surprised by it. Know it's coming, plan for the bill, and decide deliberately how you pay it.


That's the difference between a tax that ambushes you and one you've simply built into the plan.


Further reading


This article is general information only and does not take into account your objectives, financial situation or needs. It is not personal financial or tax advice. Figures reflect the 2025–26 financial year and may change. Consider seeking advice from a licensed financial adviser and a registered tax agent before acting.

 
 
 

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