Division 293 tax explained: what it is and how high income Australians can manage it

ARTICLE
11 May 2026 dot 4 min read
If you’re a higher‑income earner in Australia, you may have heard of Division 293 tax - an additional tax applied to some superannuation contributions. While it can sound complex, understanding how it works (and what you can do about it) can help you make more informed decisions about your retirement savings.
 
We spoke to Senior Financial Planner, Elias Agripanidis, to break it down.

What is Division 293 tax?

Division 293 tax is an extra 15% tax on concessional super contributions for high‑income earners.
 
It may need to be paid where your income for Division 293 purposes - your taxable income including any adjustments - plus your concessional super contributions, exceed the annual high‑income threshold (currently $250,000).
 
“This means that concessional super contributions over the threshold may effectively be taxed at 30% instead of 15%.” says Elias.
 
It’s assessed automatically by the ATO, and if you’re liable, you’ll receive a Division 293 notice explaining what you owe.

Why does the tax exist?

The tax helps to ensure superannuation tax concessions are applied in a balanced and sustainable way over the long term.

Strategies to reduce or manage Division 293 tax

Below are common strategies, outlining the pros and cons of each.
 
1. Accept the tax
 
Even with the extra 15%, super contributions are often still taxed at a lower rate than your personal marginal tax rate.
 
Pros:
  • Your super grows through compounding over time.
  • Even at 30%, super is usually more tax‑effective than taking income as cash for those in high income brackets.
Cons:
  • You’ll still face the extra Division 293 bill.
  • Short‑term cash flow takes a hit if you choose to pay the tax from your personal funds.
Best for: People with long investment horizons who value the long‑term tax advantages of super.
2. Use the ATO’s release authority to pay the tax from your super

Instead of paying the ATO using your own personal funds, you can elect to have the Division 293 tax paid directly from your super balance.

Pros:
  • Avoids impacting your day‑to‑day cash flow.
  • Simple: you just respond to the ATO notice.
Cons:
  • Reduces your super balance, slightly affecting long‑term growth.
  • Not necessarily the best option if you’d prefer to keep more inside tax‑effective super.
Best for: Those who prefer minimal immediate cash impact.
3. Defer large income events (where possible)

Some income sources - like bonuses, vested shares, or capital gains - can temporarily push you over the Division 293 threshold.
 
Pros:
  • Smart timing can reduce or eliminate exposure.
  • Helps smooth taxable income across financial years.
Cons:
  • Often not practical, as many income events are outside your control.
  • Deferral may have other tax implications.
Best for: People with flexible or discretionary income, such as business owners or executives with variable bonuses.
4. Claim legitimate deductions

Consider speaking to an accountant about certain deductions that may reduce your taxable income and therefore your Division 293 income. These can include:
 
  • Work‑related expenses: Professional subscriptions, union fees, self‑education costs.
  • Income protection insurance: Premiums for policies held outside super are generally deductible.
  • Charitable donations (DGR‑approved): Donations to Deductible Gift Recipients (DGRs) could reduce your taxable income.
Pros:
  • Straightforward way to reduce Division 293 income.
  • Often expenses you would incur anyway.
  • Helps ensure you’re maximising legitimate tax benefits.
Cons:
  • Must meet strict ATO substantiation rules.
  • Benefit is limited to eligible and genuinely incurred expenses.
  • Not always enough on their own to drop you below the Division 293 threshold.
Best for: Professionals with regular deductible expenses or those on the margin of the $250k Division 293 threshold looking to fine‑tune their taxable income.

Getting professional advice can help

Division 293 tax can feel like a penalty, but “for many high‑income earners, super is still one of the most tax‑effective places to save,” says Elias. “Understanding the rules gives you more control and helps you choose whether to minimise the tax or simply factor it into your long‑term strategy.”
 
If your income hovers around the $250k threshold or your contributions are complex, getting tailored advice from a tax professional or licensed financial planner can help you optimise your approach.
 
Speaking with an AIA Financial Wellbeing Planner can help you understand your situation and make confident financial decisions (big or small) so you can get the most out of life.
Disclaimer:
Copyright © 2026 AIA Financial Services Pty Limited (ABN 68 008 540 252, AFSL 231109), trading as AIA Financial Wellbeing. All rights reserved. This information is current at the date of this publication and is subject to change. This provides general information only, without taking into account factors like the objectives, financial situations, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, health, medical, nutritional or other advice. Before acting on the information in this publication, individuals should consider its appropriateness having regard to such factors.

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