Understanding Division 293 Tax Election
You open your myGov inbox, expecting nothing exciting. Instead, there’s a letter from the ATO about something called “Division 293 tax.” It comes with a bill you didn’t see coming.
If that’s you, take a breath. This is common, it’s usually not a mistake, and you have clear options.
A Division 293 tax notice often lands after a big year. Maybe you got a promotion, sold an investment property, or received a chunk of back pay. Sometimes your income has simply crept up over a few years until it crossed a line you didn’t know existed.
Here’s what we’ll cover:
- What Division 293 tax is and why it exists
- Who pays it, including the $250,000 threshold and the 15% rate
- How the maths works, step by step
- Your two payment options, and how the Division 293 tax election works
- The deadlines that matter most
By the end, you’ll know exactly what that letter means and what to do next.
What Is Division 293 Tax?
Division 293 tax is an extra 15% tax on some of your super contributions when your income is high. That’s the whole idea in one sentence.
Normally, money going into your super from your employer gets taxed at 15% inside the fund. That’s much lower than most people’s income tax rate, and it’s one of the big perks of super.
The government decided that people on higher incomes were getting too generous a break. So Division 293 tax adds another 15% on top for them. For those affected, some or all of their concessional contributions end up taxed at 30% instead of 15%.
Think of It Like a Discount That Shrinks
Picture super as a shop with a big discount for everyone. Division 293 says, “Once you earn above a certain amount, your discount gets smaller.”
You still get a discount. For many high-income earners, 30% is still well below their top marginal tax rate. It’s just not as big a discount as before.
What Counts as “Concessional Contributions”?
These are the before-tax contributions going into your super. They include:
- Employer contributions, including super guarantee
- Salary sacrifice contributions
- Personal contributions you claim a tax deduction for
Contributions over your concessional cap (called excess concessional contributions) aren’t counted here, because they’re taxed differently. If you’ve used carry-forward unused cap amounts to make a bigger contribution, though, all of it counts.
Who Pays Division 293 Tax?
You pay Division 293 tax if your income plus your concessional contributions add up to more than $250,000 in a financial year. That threshold has applied since the 2017–18 income year.
What “Income” Means Here
This is where people get tripped up. The ATO doesn’t just look at your salary. It uses a broader measure, similar to the one used for the Medicare levy surcharge.
Your Division 293 income adds together:
- Your taxable income
- Reportable fringe benefits
- Net financial investment losses
- Net rental property losses
- Net amounts on which family trust distribution tax has been paid
It then subtracts certain super lump sums taxed at zero and any assessable first home super saver amounts released to you. Losses get added back, so negative gearing won’t push you under the line.
Who’s Exempt?
A small group of people are treated differently. Certain state higher-level office holders contributing to constitutionally protected funds, and some Commonwealth judges, are exempt for those specific contributions.
If you’re a member of a defined benefit fund, you’ll still be assessed. Your payment is usually deferred until you take a benefit from that fund, though interest applies each year it stays unpaid.
How Division 293 Tax Is Calculated
The tax is 15% of whichever is smaller: the amount you’re over $250,000, or your concessional contributions. That “whichever is smaller” bit is the key.
Here’s the process in three steps:
- Add your Division 293 income to your concessional contributions.
- Work out how far that total is over $250,000.
- Take the smaller of that excess amount or your concessional contributions, then multiply by 15%.
Fictional Example: Priya Just Tips Over
This is a made-up scenario for illustration only.
Priya is a software engineer in Brisbane. Her Division 293 income is $230,000, and her employer and salary sacrifice contributions come to $30,000. Together, that’s $260,000.
She’s $10,000 over the threshold. The smaller figure is $10,000 (not her $30,000 in contributions). So her Division 293 tax is 15% of $10,000, which is $1,500.
Only the slice above the line gets hit. That’s a relief for people who’ve only just crossed it.
Why One-Off Events Can Trigger It
You don’t need to be a regular high earner to get a Division 293 notice. One unusual year can do it.
Common triggers include:
- Selling shares or property and making a capital gain
- Getting back pay covering previous years
- Receiving an employment termination payment
- A big bonus or any other jump in income
Fictional Example: Mick’s Big Property Sale
This is a made-up scenario for illustration only.
Mick is a high school teacher in Ballarat earning $120,000. His concessional contributions are $15,000. Normally, he’s nowhere near the threshold.
This year, he sold an investment unit. After the capital gains discount, $150,000 got added to his taxable income, bringing it to $270,000. Add his $15,000 in contributions, and his total is $285,000.
He’s $35,000 over. His contributions ($15,000) are smaller than that, so his tax is 15% of $15,000, which is $2,250. Next year, with no property sale, he probably won’t pay it at all.
How the ATO Lets You Know
The ATO sends a Division 293 notice once it has both your tax return and your super fund’s contribution details. That’s why it often arrives months after you’ve lodged.
If you lodged through myTax, the notice goes to your myGov inbox. If you use a tax agent, they can set things up so it goes to them instead.
If you have more than one super fund and one reports late, you might get an amended assessment later. That’s normal, and annoying, but normal.
What If You Think It’s Wrong?
Mistakes usually come from errors in your tax return or in what your fund reported. Check the income and contribution figures on your notice carefully.
If something’s off, you might need to amend your return or chat with your fund. Fixing those will update your Division 293 tax. If you still disagree after that, you can lodge an objection with the ATO.
Your Division 293 Tax Election Options
You’ve got two ways to pay: use your own money, or release money from your super. Choosing the second option is called making an election.
Option 1: Pay From Your Own Pocket
You pay the ATO directly, just like any other tax bill. No forms, no waiting on your fund.
Why people choose this:
- Your super balance stays untouched and keeps growing
- It’s simple and fully in your control
- There’s no risk of a slow fund payment landing after the due date
Option 2: Release Money From Super
You ask the ATO to collect the money from your super fund instead. The ATO sends your fund a release authority, and the fund pays the ATO directly.
Why people choose this:
- It protects your day-to-day cash flow
- It can make sense if the bill arrives at a tight time, like Christmas or a house move
- The money was effectively meant for super tax in the first place
If the fund pays more than you owe, the extra goes towards any other tax or Australian Government debts first. Anything left over gets refunded to you.
One heads-up: most defined benefit funds can’t release money this way. If that’s your fund, check with them first. You might have another fund you can draw from.
Neither Option Is “Right”
This comes down to your situation. Some people want their super to compound for decades. Others value breathing room right now.
If you’re unsure, a registered tax agent or licensed financial adviser can look at your full picture.
How to Make the Election (and Why Timing Matters)
You have 60 days from the date of your Division 293 assessment to make an election. Not 60 days from when you opened the letter. From the date on the notice.
The Due Date Doesn’t Move
Here’s the part that catches people out. The 60-day window only gives you extra time to decide. It doesn’t push back your payment due date.
Your tax should still be paid by the due date on your notice. Paying on time means you avoid interest.
Fictional Example: Sarah Leaves It Late
This is a made-up scenario for illustration only.
Sarah is a practice manager in Perth. Her notice arrives during a hectic stretch, and she figures she’s got two months, so there’s no rush.
Around day 50, she lodges her election to pay from super. But her payment due date has already passed, so interest starts ticking while the fund processes the request. If she’d lodged in the first week, the money could have reached the ATO in time.
The lesson? Decide early. Lodge early.
Step-by-Step: Lodging Your Election
- Log in to myGov and open ATO online services.
- Select Super, then Manage, then Division 293 election.
- Choose the fund (or funds) to release money from, and the amount.
- Submit. Online elections are lodged with the ATO straight away.
No myGov account? You can create one and link it to the ATO. You can also ask your tax agent to lodge it for you through their own online services.
There’s No Undo Button
Once you make an election, you can’t withdraw or reverse it. So double-check the amount and the fund before you hit submit.
Common Mistakes to Avoid
A few slip-ups come up again and again:
- Treating the 60 days as the payment deadline. It’s not. Your due date is on the notice.
- Ignoring the notice. Interest can build, and the problem doesn’t go away.
- Electing from the wrong fund. Defined benefit funds often can’t release money.
- Assuming you’re under the threshold. Investment losses and fringe benefits get added back in.
- Rushing the election. It’s permanent, so confirm the details first.
Your Quick Division 293 Checklist
Keep this handy when the letter arrives:
- Find the assessment date and payment due date on your notice
- Check the income and contribution figures are correct
- Decide whether to pay personally or from super
- If releasing from super, confirm your fund can do it
- Lodge your election well within 60 days, ideally before the due date
- Double-check everything before submitting
The Bottom Line
A Division 293 tax notice feels alarming, but it’s really just the ATO trimming your super tax break because your income crossed $250,000. The tax is 15%, and it only applies to the smaller of your contributions or the amount you’re over the line.
You can pay it yourself or release the money from super. If you go the super route, you’ve got 60 days from the assessment date to elect, but your due date stays the same. Once lodged, your election is final.
So here’s your one next step. Grab your notice, find the assessment date and the due date, and pop both in your calendar today. Everything else gets easier from there.
This post offers general information only and isn’t personal financial or tax advice. For guidance on your own situation, speak with a registered tax agent or licensed financial adviser.
