293 Tax Calculation

Estimate your potential Australian Division 293 tax using a premium calculator designed for quick planning. Enter your income and low tax super contributions to see whether the additional 15% tax may apply above the relevant threshold.

Expert Guide to Division 293 Tax Calculation

Division 293 tax is one of the most important superannuation rules for higher income Australians to understand. It is designed to reduce the tax concession received on certain concessional super contributions when a person has income above a specified threshold. In practical terms, many workers know that concessional super contributions are usually taxed at 15% in the super fund. Division 293 can add another 15% tax on part or all of those low tax contributions if your adjusted income for Division 293 purposes exceeds the threshold. That means the affected contributions can effectively face a total tax of 30% instead of 15%.

If you are a senior employee, executive, medical specialist, business owner, partner in a professional practice, or anyone whose taxable income moves around the threshold from year to year, this rule matters. It can also apply unexpectedly if you receive a bonus, capital gain, employment termination amount, large fringe benefit, or make salary sacrifice contributions on top of super guarantee contributions. The goal of a good 293 tax calculation is not only to estimate the extra tax bill, but also to help you plan cash flow, contribution strategy, and timing across financial years.

What Division 293 tax actually does

Under the Australian system, concessional contributions such as employer super guarantee amounts and salary sacrifice contributions generally receive concessional tax treatment inside super. For many people, that is a valuable long term savings incentive. For higher income earners, the government applies Division 293 tax to reduce part of that advantage. The tax is assessed by the Australian Taxation Office, not usually withheld by your employer at the time of contribution.

Core idea: Division 293 tax applies at an extra 15% rate to the lesser of:

• your low tax contributions for the year, or
• the amount by which your Division 293 income exceeds the applicable threshold.

That formula is why your tax result can be zero even if you are close to the threshold, modest even if you are slightly above it, or a full 15% of your concessional contributions when your income is far beyond the threshold. The calculator above follows this general logic and helps you model likely outcomes quickly.

The basic formula for a 293 tax calculation

For many planning situations, the process can be simplified into three steps:

1. Calculate Division 293 income by combining taxable income and certain add backs such as reportable fringe benefits, net investment losses, reportable employer super contributions, and low tax contributions.
2. Compare that total against the threshold, which is currently $250,000 for general use, while older periods may involve the previous $300,000 threshold.
3. Apply 15% tax to the lesser of low tax contributions or the amount above the threshold.

Expressed simply:

Division 293 tax = 15% x min(low tax contributions, Division 293 income – threshold)

Example: Suppose your taxable income is $235,000 and your concessional contributions treated as low tax contributions are $27,500. If there are no other add backs, your Division 293 income may be approximately $262,500. You are $12,500 above the $250,000 threshold. The lesser of $27,500 and $12,500 is $12,500. Your estimated Division 293 tax would therefore be $1,875.

What counts toward Division 293 income

One of the main reasons people miscalculate Division 293 tax is that they look only at taxable income. The law uses a broader concept. For planning purposes, your Division 293 income often includes:

• taxable income
• reportable fringe benefits
• net financial investment loss and net rental property loss
• reportable employer super contributions, such as salary sacrifice
• low tax contributions, commonly concessional contributions taxed at 15% in the fund

This broader measure means someone with taxable income below $250,000 can still end up paying Division 293 tax once the extra items are added back. That is especially common for people who salary sacrifice aggressively or receive non cash benefits through work.

How low tax contributions fit into the calculation

Low tax contributions are central to the outcome because they represent the maximum amount on which the additional 15% can apply. In many straightforward cases, low tax contributions are broadly similar to concessional contributions that have already been taxed at 15% in the super fund. If your low tax contributions are $20,000, then your Division 293 taxable amount can never exceed $20,000. If the amount by which your income exceeds the threshold is only $8,000, then only that $8,000 is taxed at the extra 15% rate.

For high income earners who are well above the threshold, the full low tax contribution amount can be exposed to Division 293 tax. In that case, the effective tax on those affected concessional contributions rises from 15% to 30%, which may still be concessional compared with the top marginal rate, but the planning assumptions are very different.

Current and historical thresholds

The threshold matters because older calculations may need a historical setting. The threshold was previously $300,000 and later reduced to $250,000. If you are reviewing prior year tax outcomes, do not assume the current threshold always applies.

Period	General threshold	Planning implication
2012-13 to 2016-17	$300,000	Fewer taxpayers were captured, especially those with income between $250,000 and $300,000.
2017-18 onward	$250,000	More professionals and dual income households became exposed to the additional 15% tax.

Concessional contribution caps and why they matter

Division 293 tax should be considered alongside concessional contribution caps. Even though they are different rules, they often affect the same planning decision. If you exceed the concessional cap, separate tax outcomes can arise. The cap has changed over time, so historical figures matter when reviewing prior years.

Financial year	General concessional contributions cap	Comment
2021-22	$27,500	Common baseline used in many current planning scenarios.
2022-23	$27,500	No change from the prior year.
2023-24	$27,500	Still a key figure for salary sacrifice planning.
2024-25	$30,000	The higher cap can increase low tax contributions and therefore potential Division 293 exposure.

When a person is most likely to be caught

There are several common patterns that trigger Division 293 tax:

• high salary plus compulsory super guarantee contributions
• salary sacrifice arrangements that push adjusted income above the threshold
• one off bonus or commission income late in the year
• capital gains from selling shares, property, or business assets
• reportable fringe benefits such as certain packaged employment benefits
• negative gearing or investment losses that are added back for Division 293 purposes

Because the tax is assessed after the end of the year, many people do not realize they are affected until the ATO issues a notice. A calculator is useful because it lets you test the impact of extra salary sacrifice, estimate whether an annual bonus may create a tax liability, and understand whether making concessional contributions still delivers the after tax result you expect.

How to use the calculator effectively

For the most realistic estimate, enter your taxable income first. Then add any reportable fringe benefits, net investment losses, and reportable employer super contributions. Finally, enter your low tax contributions. The calculator will combine these values to estimate your Division 293 income and compare that figure to the threshold you select. It then determines the excess over the threshold and applies the 15% rate to the smaller of the excess and your low tax contributions.

The result section shows the estimated Division 293 income, the amount above the threshold, the taxable contribution portion, the extra Division 293 tax, and a simple estimate of the total tax applied to those concessional contributions when the standard 15% contributions tax is considered. This gives you a more complete planning picture rather than showing only the additional assessment.

Common mistakes in 293 tax calculation

1. Ignoring add backs: Looking only at taxable income can understate exposure.
2. Using the wrong threshold: Historical years may require the old $300,000 threshold.
3. Forgetting employer contributions: Compulsory super guarantee contributions can already be enough to create exposure once income is high enough.
4. Confusing concessional caps with Division 293: They are related but different tax rules.
5. Assuming the entire contribution is always taxed: The additional tax applies only to the lesser of low tax contributions and the amount above the threshold.

Strategic planning ideas

Paying Division 293 tax does not automatically mean concessional contributions are a poor choice. For many taxpayers, the contributions may still be tax effective compared with earning the same amount outside super at top marginal rates. The better question is whether the overall strategy matches your cash flow, retirement objectives, and current year tax position.

• Review expected bonuses before 30 June.
• Track employer and salary sacrifice contributions together.
• Consider whether using the full concessional cap still makes sense in your marginal tax bracket.
• Model carry forward concessional contribution strategies carefully, especially in years with unusually high income.
• Keep records ready because the ATO may issue the assessment after your return has been processed.

How the ATO generally handles payment

The ATO typically issues a Division 293 tax notice of assessment after it has enough information from your tax return and super fund reporting. You may have options to pay the liability personally or release money from super to cover some or all of it. The exact process, deadlines, and eligibility rules should be checked directly with official sources, because they can change and the operational detail matters.

Authoritative resources

For official guidance and current law administration, review:

• Australian Taxation Office
• ATO Division 293 tax guidance
• Moneysmart government guidance on super contributions

Final takeaway

A strong 293 tax calculation is about more than checking whether your salary is above $250,000. You need to consider the broader Division 293 income concept, the role of low tax contributions, and the fact that only the lower of two figures is taxed at the extra 15% rate. Once you understand that structure, the rule becomes much easier to manage. Use the calculator above as a planning tool, test multiple scenarios, and compare the result with current official guidance if you are close to the threshold or dealing with a complex year. For high income earners, even small changes in salary sacrifice, bonus timing, or concessional contributions can change the final assessment materially.