Division 293 tax is an extra Australian tax that applies to the concessional (before-tax) superannuation contributions of high-income earners. It effectively reduces the value of the tax concessions on those contributions by to either the excess above the $250,000 threshold or the total concessional contributions, whichever is less, at a rate of 15% (with the tax calculated on the lesser of the two amounts). The key points are:

• Threshold: The Division 293 test combines your relevant income with your concessional super contributions to see if you exceed the $250,000 threshold. If you do, the excess amount may be taxed at 15% under Division 293. If your combined figure is under $250,000, no Div 293 tax is charged. This threshold has been $250,000 since 2017-18 and is the commonly cited figure for 2024/25 and beyond, though always verify for the current income year.

• Who pays: It targets high-income earners whose income plus concessional super contributions push the total over the threshold. The tax is assessed by the ATO and applied to the lesser of either the excess over $250,000 or the concessional contributions themselves (the “taxable contributions”).

• Rate and calculation: The Division 293 tax is 15% of the amount determined to be the Division 293 taxable contributions (or the excess over the threshold, whichever is smaller). The income component used for this calculation aligns with the same approach used for MLS (Medicare Levy Surcharge) calculations, including various components like taxable income and certain losses, as applicable to your situation. An example in public explanations shows how the 15% is applied to the lesser of the excess or the contributed amount.

• How it’s reported: If you’re subject to Division 293 tax, your concessional contributions are assessed to determine the Division 293 taxable contributions, and the tax is calculated and payable to the ATO. Your tax return and superannuation contributions will reflect this calculation, and you may also see an assessment notice from the ATO.

• Examples and resources: Resources from the ATO and superannuation providers explain with concrete examples how to determine the threshold, calculate the excess, and compute the 15% tax on the Division 293 amount. These include fact sheets and examples showing typical calculations for high-income earners.

If you want, I can tailor the explanation to your exact numbers (eligible income, concessional contributions, and any applicable adjustments), and walk through a worked example using the current thresholds for the relevant income year.