Division 293 tax is one of the most misunderstood aspects of superannuation within the Australian financial services industry. It often catches high-income earners in Adelaide by surprise and can materially affect retirement planning outcomes if not managed properly.
For professionals, executives, and business owners seeking specialist superannuation advice and financial planning services in Adelaide, understanding how Division 293 works is essential to making informed financial decisions and achieving your financial goals.
This article explains Division 293 tax in plain English, outlines who it applies to, how it is calculated, and how working with a certified financial planner in Adelaide can help manage its impact as part of a broader retirement planning strategy.
What Is Division 293 Tax?
Division 293 tax is an additional 15% tax applied to some or all of your concessional superannuation contributions if your income exceeds a prescribed threshold.
Its purpose is to reduce the tax advantage of superannuation for higher-income earners by increasing the effective tax rate on concessional contributions from 15% to up to 30%.
Importantly, Division 293 does not apply to your entire income. It applies only to concessional super contributions, and only where income thresholds are exceeded.
Who Does Division 293 Apply To?
Division 293 applies if your income for surcharge purposes exceeds $250,000 in a financial year.
Income for surcharge purposes includes:
taxable income,
reportable fringe benefits,
total net investment losses, and
concessional superannuation contributions.
This means many individuals fall into Division 293 territory without realising it, particularly where employer super contributions or bonuses push them over the threshold.
For those seeking financial advice in Adelaide, this is a key area where proactive planning can avoid surprises and protect your financial future.
What Are Concessional Super Contributions?
Concessional contributions include:
employer Super Guarantee (SG) contributions,
salary sacrifice contributions, and
personal contributions claimed as a tax deduction.
These contributions are normally taxed at 15% inside super. Division 293 applies an additional 15% tax on top of this where income thresholds are breached.
How Is Division 293 Tax Calculated?
Division 293 tax is calculated on the lesser of:
your total concessional contributions for the year, or
the amount by which your income exceeds $250,000.
Example
If:
your income for surcharge purposes is $270,000, and
your concessional contributions are $30,000,
The excess over the threshold is $20,000. Division 293 tax would apply to $20,000, not the full $30,000.
An additional 15% tax would therefore be payable on $20,000.
How and When Is Division 293 Paid?
The Australian Taxation Office (ATO) issues a Division 293 determination after your tax return and super fund reporting are finalised.
Once assessed, you can:
pay the tax personally, or
elect to release the amount from your superannuation fund.
Most individuals choose to release the amount from super to preserve personal cashflow, particularly in the years leading up to retirement.
Why Division 293 Is Relevant to Retirement Planning in Adelaide
Division 293 should never be considered in isolation. It must be assessed as part of your broader retirement planning strategy.
Key considerations include:
how much you are contributing to super,
whether contributions remain tax-effective after Division 293,
how super fits alongside other investments and multi asset class portfolios,
the timing of retirement and income needs.
For clients undertaking retirement planning in Adelaide, Division 293 is often one of several moving parts that require coordination by a financial planner with diverse skills.
Does Division 293 Mean Super Is No Longer Worthwhile?
In most cases, no.
Even with Division 293:
contributions taxed at 30% may still be preferable to marginal tax rates of up to 47% (including Medicare levy),
earnings inside super remain concessionally taxed,
super continues to provide long-term tax efficiency and wealth management benefits.
The question is not whether to use super, but how much to contribute and when.
This is where working with a certified financial planner in Adelaide who understands high-income planning becomes particularly valuable.
Common Situations Where Division 293 Applies Unexpectedly
Division 293 commonly applies where:
bonuses or incentive payments are received,
there are multiple employers,
salary sacrifice is not coordinated with employer SG,
personal deductible contributions are made late in the year,
investment losses inflate surcharge income calculations.
Without careful planning, individuals can breach thresholds unintentionally, impacting their financial affairs.
Managing Division 293 With Strategic Advice
Effective management of Division 293 does not usually involve avoiding it altogether. Instead, it involves making informed, strategic financial decisions.
A structured approach may include:
reviewing total remuneration and contribution levels annually,
coordinating salary sacrifice with employer contributions,
assessing whether contributions should be reduced or deferred,
balancing super contributions with investments outside super,
factoring Division 293 into retirement income projections.
This type of advice sits squarely within specialist super advice in Adelaide rather than generic financial planning.
How Division 293 Fits Into a Broader Retirement Strategy
For clients approaching retirement, Division 293 must be assessed alongside:
concessional contribution caps,
non-concessional contribution opportunities,
Transition to Retirement strategies (where applicable),
retirement income stream planning,
Age Pension eligibility considerations.
A well-constructed retirement plan integrates all of these elements rather than treating them in isolation.
Why Local Adelaide Advice Matters for Division 293 Planning
While Division 293 tax rules apply nationally, how they affect your retirement strategy is highly personal. For professionals and executives living in Adelaide and surrounding suburbs such as Norwood, Unley, Burnside, Glenelg, Prospect, North Adelaide and Henley Beach, Division 293 often interacts with broader decisions around superannuation, investments, property and retirement timing.
Many high-income earners in Adelaide hold a mix of assets inside and outside super, including investment portfolios, term deposits and property. Working with a financial advisor Adelaide residents trust ensures Division 293 tax is carefully managed within the broader context of your financial position and retirement planning goals. A knowledgeable financial advisor Adelaide can help coordinate your superannuation contributions with other investments to maximise tax efficiency and long-term wealth. Engaging a financial advisor Adelaide offers personalised strategies that align with your unique financial journey and individual needs, helping you make informed decisions for a secure retirement.old a mix of assets inside and outside super, including investment portfolios, term deposits and property. Without coordinated planning, Division 293 tax can reduce the effectiveness of super contributions or create unexpected tax liabilities late in the financial year.
Working with a financial planner in Adelaide allows Division 293 to be assessed alongside:
income and lifestyle costs specific to Adelaide,
superannuation contribution strategies,
investment structures outside super,
and long-term retirement income sustainability.
This integrated approach helps ensure Division 293 is managed strategically, rather than reactively.
How Money Path Helps With Division 293 Planning
At Money Path, we provide tailored financial advice in Adelaide, with a strong focus on superannuation and retirement planning.
We help clients:
understand whether Division 293 applies,
assess the true cost and benefit of concessional contributions,
integrate tax considerations into retirement planning,
coordinate super and non-super investments,
plan contributions and withdrawals with confidence.
As a boutique, independent financial advice firm holding an Australian financial services licence, our recommendations are not influenced by commissions or product incentives. Our focus is on clarity, structure, and long-term outcomes.
Frequently Asked Questions
What is Division 293 tax in simple terms?
Division 293 tax is an extra 15% tax on concessional super contributions for people whose income exceeds $250,000.
Does Division 293 apply every year?
Only in years where your income for surcharge purposes exceeds the threshold.
Can I avoid Division 293 entirely?
Not always. In many cases, it still makes sense to contribute to super even when Division 293 applies.
Is Division 293 a penalty?
No. It is an additional tax designed to reduce the concessional benefit of super for high-income earners.
Can Division 293 be paid from super?
Yes. The ATO allows you to release funds from super to pay the liability.
Does Division 293 affect retirement income?
Indirectly. Higher tax reduces the net benefit of contributions, which is why planning is important.
Should I stop salary sacrificing if Division 293 applies?
Not necessarily. The decision should be based on overall tax efficiency and retirement objectives.
Why seek super advice in Adelaide specifically?
Local advisers understand regional factors and can integrate super planning into broader retirement advice.
Conclusion
Division 293 tax is complex, but it does not need to derail your retirement strategy. With the right financial planning services and advice, it can be managed as part of a structured and informed approach to superannuation and retirement planning.
If you are a high-income earner seeking financial planning in Adelaide, obtaining specialist super advice can help ensure your strategy remains tax-effective, compliant, and aligned with your long-term financial goals.
