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Div 293 Tax: What High-Income Business Owners Need to Know About Extra Super Tax

23/07/2026 01:06 PM

Div 293 Tax: What High-Income Business Owners Need to Know About Extra Super Tax

Superannuation contributions are generally taxed concessionally — one of the reasons they're such a widely used part of personal and business tax planning. But once income crosses a certain threshold, an additional tax applies specifically to that concessional treatment. That's Division 293, and it catches a meaningful number of business owners, directors, and CFOs who don't realise it applies until it shows up on their assessment.

What Division 293 Actually Does

Division 293 imposes an additional tax on concessional (before-tax) superannuation contributions for individuals whose income, combined with those contributions, exceeds a specified high-income threshold. In practical terms, once you're above that threshold, a portion of your super contributions — which would otherwise be taxed at the standard concessional rate — is taxed at an additional rate on top of that.

This isn't a penalty in the sense of a compliance failure. It's a deliberate design feature of the system, intended to reduce the size of the tax concession available to high-income earners on their super contributions, without removing the concession entirely.

Why Business Owners Are Particularly Exposed

Business owners and directors are more likely than the average employee to encounter Division 293, because:

Income for Division 293 purposes includes more than salary — it generally captures a broader definition of income, including certain business and investment income, not just PAYG wages.
Owners drawing a mix of salary and dividends may not immediately realise how their combined income interacts with the threshold, particularly in a strong trading year.
Directors making large concessional contributions — for example, catching up on unused concessional caps from prior years — can inadvertently push themselves well above the threshold in a single year.
CFOs and senior executives with performance-based remuneration can experience significant year-to-year income variability, meaning Division 293 exposure isn't always predictable from one year to the next.

How the Additional Tax Is Actually Assessed

Division 293 tax isn't withheld automatically the way standard super contributions tax is. Instead, it's assessed separately, generally after your income tax return is processed, based on the combined income and contribution information reported to the ATO. This means many business owners don't see the liability coming until an assessment notice arrives — sometimes well after the relevant contributions were made and the cash flow moment has passed.

What to Do If You're Likely Affected

Estimate your combined income (including the broader Division 293 definition) before the end of the financial year, rather than relying solely on salary or wages as the reference point.

Model concessional contributions against the threshold in advance, particularly if you're planning to use unused carry-forward concessional cap amounts in a single year.

Set aside funds for the additional tax liability, since it's assessed separately and can arrive as an unexpected bill if not anticipated.

Consider the timing of large one-off contributions, since bunching several years' worth of catch-up contributions into a single high-income year can trigger a larger Division 293 liability than spreading them across multiple years.

Review this alongside your overall remuneration strategy, since salary, dividends, and superannuation contributions all interact with your total taxable position — not just your super contributions in isolation.

A Planning Issue, Not Just an Assessment Surprise

Division 293 isn't something that can be avoided through better paperwork — it's a function of income level and contribution timing. But it is something that can be planned for, particularly around the timing of larger contributions and the overall structure of how a business owner draws income from their business.

Understand Your Exposure Before It Shows Up on an Assessment

If your personal income — including business income, dividends, and super contributions — is likely to sit above the high-income threshold, it's worth reviewing your position before the financial year closes, rather than after an assessment notice explains why an additional amount is owed.

RBizz reviews personal and business income structuring to help you understand and plan for Division 293 exposure — schedule a free consultation to check your position.

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