Division 293 Tax: The Extra Super Tax for High-Income Freelancers

Super contributions are taxed at 15%. That's the deal. Except when your income and concessional contributions combined exceed $250,000, the ATO applies an additional 15% on the contributions that push you over the threshold. This is Division 293, and it effectively doubles the super tax rate from 15% to 30% on the affected portion.

The instinct is to think it wipes out the benefit of contributing. It doesn't. Even at 30%, the super tax rate is still well below the 47% marginal rate you'd pay on that income otherwise. But it's worth understanding exactly how Division 293 works so you can plan around it.

Not yet familiar with how voluntary super contributions work as a tax deduction? Start there.

How Division 293 works

The standard tax on concessional super contributions is 15%. Division 293 adds another 15% on top, but only on the portion of contributions that pushes your combined income and contributions above $250,000.

The formula:

1. Calculate your Division 293 income = taxable income + concessional super contributions (plus a few other components like reportable fringe benefits and net investment losses)
2. If this total exceeds $250,000, the extra 15% applies to the lesser of:
   • Your concessional contributions for the year, or
   • The amount by which your Division 293 income exceeds $250,000

Worked example: earning $240,000

Alex earns $240,000 and makes a $30,000 voluntary super contribution.

Division 293 income: $240,000 + $30,000 = $270,000

This exceeds $250,000 by $20,000.

Division 293 tax applies to the lesser of:

• Concessional contributions: $30,000
• Amount over $250,000: $20,000

Division 293 tax: $20,000 × 15% = $3,000

So $20,000 of Alex's contribution is taxed at the full 30% inside super, and the remaining $10,000 is taxed at the standard 15%.

Worked example: earning $280,000

Jordan earns $280,000 and contributes $30,000 to super.

Division 293 income: $280,000 + $30,000 = $310,000

Exceeds $250,000 by $60,000. But the lesser of $60,000 and $30,000 (contributions) is $30,000.

Division 293 tax: $30,000 × 15% = $4,500

All of Jordan's concessional contributions are taxed at 30% inside super. The standard 15% contributions tax ($4,500) plus the Division 293 tax ($4,500) = $9,000 total tax on the $30,000 contribution.

Do super contributions still save tax with Division 293?

Yes.

Even at 30% total super tax, it's still less than your marginal income tax rate. For most high earners, the savings are still significant.

At $240,000 income, your marginal rate is 45% (plus 2% Medicare Levy = 47%). Even with Division 293 pushing super tax to 30%, you're saving 17 cents per dollar contributed. On a $30,000 contribution, the analysis looks like this:

For that $30,000 contribution:

Net saving: ~$4,200. It's a smaller saving than someone earning $120,000 would get (where the gap is 32% vs 15% = 17 cents per dollar across the full contribution), but it's still real money.

How the ATO assesses Division 293

You don't calculate or pay Division 293 yourself at tax time. The process is:

1. You lodge your tax return as normal, claiming your super contribution deduction (make sure you've submitted your Notice of Intent first)
2. The ATO matches your return against your super fund's reporting
3. If Division 293 applies, the ATO issues a Division 293 assessment notice, usually a few months after your tax return is processed
4. You choose to pay the tax from your bank account or have it released from your super fund

Most people choose to have it released from super, which means the fund pays the ATO directly from your super balance. Your take-home cash isn't affected because the extra tax comes out of the super money that was already locked away.

Who actually pays Division 293?

Division 293 applies when your Division 293 income exceeds $250,000. This income measure includes:

• Taxable income
• Concessional super contributions (including employer and personal deductible contributions)
• Reportable fringe benefits
• Total net investment loss (negative gearing losses added back)

For a freelancer with no investment properties and no fringe benefits, it comes down to: taxable income + concessional contributions > $250,000.

If your freelance income is below $220,000, you generally won't trigger Division 293 even with maximum $30,000 contributions. Once your income passes $220,000, the threshold starts to bite.

Strategies for managing Division 293

Optimise contribution amount

If you're just above the $250,000 threshold, you might contribute less than $30,000 to minimise Division 293 tax while still getting the standard 15% rate on a good chunk. Run the numbers. Sometimes contributing $20,000 at 15% super tax delivers a better after-tax result than $30,000 where part is taxed at 30%.

Use our super calculator to model different contribution amounts against your income.

Time contributions across financial years

If your income fluctuates (common for freelancers), consider making larger contributions in years when your income is below $250,000 combined, and smaller contributions in peak years. Just remember contributions need to land before the EOFY deadline to count. Catch-up contributions make this strategy practical, since you can accumulate unused cap space in high-income years and deploy it in lower-income years.

Consider the non-concessional alternative

If Division 293 makes concessional contributions less attractive, you could make non-concessional (after-tax) contributions instead. These aren't tax-deductible, but they're not taxed inside super at all. The non-concessional cap is $120,000 per year (or $360,000 over three years using the bring-forward rule). This only makes sense if you've already maxed out your concessional cap and still want to build super.

Frequently asked questions

Is Division 293 on top of the normal 15% contributions tax?

Yes. Standard 15% still applies, plus another 15% on the affected portion. Total: 30%.

Can I avoid Division 293 by contributing less?

You can reduce or eliminate it by keeping your combined income and contributions at or below $250,000. If your income is $230,000, contributing $20,000 instead of $30,000 keeps you exactly at the threshold.

Whether this is actually worth doing depends on the numbers. The standard 15% saving on that extra $10,000 might still outweigh the Division 293 cost. Run it through our super calculator with your actual income to see.

Does Division 293 apply to employer contributions too?

Yes. Division 293 applies to all concessional contributions: personal deductible contributions, employer Super Guarantee, and salary sacrifice. If your employer contributes $12,000 and you contribute $18,000 personally, the full $30,000 is included in the Division 293 calculation.

When do I have to pay it?

The ATO issues the assessment a few months after processing your tax return. You get 21 days to either pay from your bank account or elect to have it released from your super balance. Most people choose the super release option, which means the extra tax comes out of money that was already locked away. Your take-home cash isn't affected.