Division 293 Tax — How It Works
Division 293 is the additional 15% tax that applies to concessional (pre-tax) super contributions when your income for surcharge purposes exceeds $250,000. It exists because at very high incomes, the standard 15% contributions tax represented a 30+ percentage point discount vs marginal rates. Div 293 closes some of that gap by taking the effective tax on those contributions to 30%.
The "income for surcharge purposes" test
This is broader than taxable income. It adds: reportable fringe benefits, total net investment losses (negative gearing), reportable employer super contributions (salary sacrifice + voluntary employer top-ups), and your concessional contributions themselves. The total is what's compared to the $250,000 threshold.
The lesser-of test
The 15% Div 293 tax applies to the lesser of: your concessional contributions, OR the amount you exceed $250,000. So if you're $20,000 over the threshold but contributed $32,500, you pay Div 293 only on the $20,000.
How you pay it
After tax return lodgement, the ATO sends you a Div 293 notice. You can pay from your own funds (preserving super balance) or use a release authority to have your super fund pay it directly to the ATO. Most people release from super because it's after-tax cash that's hard to access otherwise.
Is salary sacrifice still worth it at 30% effective tax?
For income over $190,000, the marginal rate is 47% (45% + 2% Medicare). Compared to 30% effective contributions tax, you still save 17 percentage points on every dollar contributed. The benefit narrows from middle earners but doesn't disappear. Where it does flip: if you'd rather have the money outside super (for liquidity, mortgage offset, or non-super investing), or if you're concerned about future Div 296 (the proposed 30% tax on super earnings over $3 million). See ATO — Division 293 tax for the official rules.