Division 293 Tax Guide for Nunawading High Earners: Strategies for 2026

Last October, a Nunawading business owner received an unexpected A$4,500 tax assessment from the ATO, months after they thought their 2023 taxes were settled. The source of this surprise bill was the often-misunderstood division 293 tax, a levy specifically for high-income earners and their superannuation contributions.

If you’re earning over the threshold, it’s easy to feel like you’re being “double taxed” on your super, especially when the rules for calculating the A$250,000 limit seem intentionally complex. We understand that feeling of frustration. It’s why we believe in moving you from reactive tax stress to proactive wealth protection. This guide promises to give you the clarity and expert strategies needed to master your superannuation obligations for 2026 and beyond.

We’ll come alongside you to explore how to anticipate this liability, review optimal business structures, and integrate your tax planning with your long-term family and estate goals.

What is Division 293 Tax? Understanding the High-Income Super Levy

At its core, Division 293 tax is an additional 15% tax on certain superannuation contributions for high-income earners in Australia. Think of it as the Australian Taxation Office (ATO) rebalancing the tax concessions given on super. While most people pay a 15% tax on their concessional (before-tax) super contributions, this extra levy is designed to reduce the tax benefit for those in the highest tax brackets. It ensures the system remains fair and sustainable.

Many people mistakenly call this “double taxation.” That isn’t quite right. Ordinarily, concessional contributions are taxed at a flat rate of 15%, a core principle of the Taxation of superannuation in Australia system. For someone earning over A$180,000, their marginal tax rate is 45%. The 15% super tax provides them a 30% tax saving. The division 293 tax simply adds another 15%, bringing the total tax on those contributions to 30%. This reduces the tax concession but doesn’t eliminate it. You’re still better off than if you took the income in hand.

The $250,000 Threshold Explained

The trigger for this tax is a specific income threshold. For the financial year ending 30 June 2026, your ‘Division 293 income’ is the sum of your taxable income and certain additions, and the tax applies if this figure exceeds A$250,000. It’s crucial to understand that the ATO looks beyond your payslip. Your Division 293 income includes:

• Your assessable income (less deductions)
• Total reportable fringe benefits
• Total net investment losses
• Your concessional super contributions

This is why your “take-home” pay isn’t the only factor. A company car or a negatively geared investment property can easily push you over the threshold, even if your salary doesn’t.

Who is Affected in the Nunawading Business Community?

We see this tax frequently impacting successful professionals and business owners across Melbourne’s Eastern Suburbs. The typical profiles include medical specialists with private practices, established consultants, and thriving local business owners in areas like Nunawading. Often, a particularly strong year of business growth is the trigger. While celebrating increased profits, owners can be caught off guard by an unexpected Division 293 liability. This is where it’s vital to have a financial partner who can help you plan ahead. We believe in coming alongside you to understand your business’s unique dynamics, helping you structure for success and manage cash flow to account for these liabilities before they arrive.

How Division 293 is Calculated: Avoiding the Tax Surprise

The arrival of a division 293 tax notice can feel like an unwelcome surprise, often landing in your inbox 6 to 9 months after you’ve lodged your tax return. Understanding the calculation helps you anticipate it, turning a potential shock into a predictable part of your financial planning. It’s not complex, but it relies on data from two different sources.

The Australian Taxation Office (ATO) uses a specific formula to determine if you need to pay this extra tax. The core calculation is:

Your Income for Division 293 Purposes + Your Concessional Super Contributions

If this combined figure exceeds the $250,000 threshold, the additional 15% tax is applied. The ATO gets your income details from your personal tax return and your super contribution data directly from your superannuation fund. Because your fund has until 31 October each year to report these figures, the ATO can only complete the calculation and issue the assessment notice well into the following year. You can read the full details in the official ATO guidelines on Division 293 tax for a complete list of what’s included.

Concessional Contributions vs. Non-Concessional

Only concessional (before-tax) contributions count towards the Division 293 calculation. These include your employer’s Superannuation Guarantee (SG) payments, any salary sacrifice arrangements, and personal contributions you claim as a tax deduction. Non-concessional (after-tax) contributions are not included because you’ve already paid tax on that money. If you exceed the general concessional contributions cap (A$27,500 for the 2023-24 financial year), the entire amount is still counted for Division 293 purposes. Understanding the exact super contribution cap 2025 limits for both concessional and non-concessional contributions is essential to avoid unintended tax consequences.

Example Calculation for a Melbourne Professional

Let’s look at a practical example. Meet Olivia, a business owner in Melbourne.

• Her taxable income for the year is A$240,000.
• Her business contributes A$27,500 to her super fund (the maximum concessional amount for the year).

Here’s how the ATO calculates her liability:

1. Combine Income and Contributions: A$240,000 + A$27,500 = A$267,500.
2. Determine the Excess: A$267,500 – A$250,000 (threshold) = A$17,500.
3. Identify the Taxable Amount: The tax is levied on the lesser of the total concessional contributions (A$27,500) or the excess amount (A$17,500). For Olivia, this is A$17,500.
4. Calculate the Tax: 15% of A$17,500 = A$2,625.

This A$2,625 is an additional tax on her super contributions. Proactively managing your income and contribution strategies is vital. If you’re looking to build a clear plan around your super and income, our team can come alongside you to ensure your financial goals are met without tax surprises.

Managing the Bill: Payment Options and Cash Flow Impact

Receiving a tax notice from the ATO is rarely a welcome event. When your Division 293 tax assessment arrives, it presents a critical decision: how should you pay it? This isn’t just a simple transaction; it’s a strategic choice that can impact your personal cash flow and your long-term retirement goals. You have two primary pathways, and the right one depends entirely on your financial picture and what you value most.

You can either:

• Pay the liability directly from your personal, after-tax funds.
• Elect to have the amount released from your accumulated superannuation balance.

Let’s walk through what each option means for you.

Paying from Superannuation: Is it Wise?

The option to pay your division 293 tax bill directly from your super fund provides immediate relief to your personal bank account. The ATO makes this process straightforward; you can make an election through your myGov account or ask us to handle it for you. This “release authority” instructs your super fund to send the required amount directly to the tax office. While it feels painless in the short term, it comes with a significant long-term cost.

Withdrawing funds from super means you lose the future compounding growth on that money. A $4,500 tax bill paid from super today could have grown to over $20,000 in a tax-effective environment over 25 years. This is why we find many of our high-net-worth clients in Nunawading and across Melbourne’s east choose to pay this tax from their personal funds. Their goal is to maximise wealth inside superannuation, viewing the short-term cash outlay as a better long-term investment. The process for making an election is detailed in the Australian Taxation Office (ATO) guidelines on Division 293 tax, and we can help you navigate it. It’s also important to know that members of defined benefit funds have different rules; their liability is typically deferred and tracked in a separate account until they take their benefit.

Cash Flow Management for Business Owners

For business owners, a surprise tax bill isn’t just a personal inconvenience; it can disrupt business cash flow and operational stability. This is where we move beyond being “bean counter” accountants. True financial management means looking ahead. Tracking the numbers isn’t just about profit and loss; it’s about anticipating future liabilities and planning for them.

A Division 293 tax liability should never be a surprise. By integrating income projections into your annual financial strategy, we can estimate this liability well in advance. This allows you to set aside funds progressively, ensuring the money is ready when the notice arrives without impacting your ability to pay suppliers, meet payroll, or invest in growth. We work with business owners to build this foresight into their financial rhythm, offering proactive tax planning as part of our core services to ensure there are no year-end surprises. It’s about taking control of your financial future, one quarter at a time.

Structuring for Tax Success: Strategies to Mitigate Division 293

Many high-income earners believe salary sacrificing into superannuation is the ultimate tax-saving tool. And for a time, it is. But as your income grows, this strategy can backfire. The moment your adjusted taxable income plus your low-tax super contributions exceed A$250,000, you trigger the division 293 tax. The very contributions meant to save you tax now attract an additional 15% levy. It’s a classic case of a good strategy becoming inefficient without a bigger-picture plan.

True tax success requires looking beyond your payslip and examining your entire financial structure. For business owners, this means moving away from the simple model of paying yourself a large director’s salary. A far more flexible and powerful approach involves using structures like a family trust. A trust allows you to distribute business profits strategically, giving you control over who receives the income and when.

For instance, instead of paying yourself a salary of A$300,000, you might draw a salary of A$220,000. The remaining A$80,000 in profit can be distributed from the trust to a corporate beneficiary. This income is then taxed at the company tax rate, currently 25% for eligible businesses, not your marginal personal rate of 47% (including the Medicare levy). This single adjustment can keep your personal “Division 293 income” below the threshold, saving you thousands.

The Power of Quarterly Reviews

An unexpected tax bill feels like a penalty for a successful year. It shouldn’t. We prevent these end-of-year shocks by implementing a disciplined quarterly review process. Every 90 days, we sit down with you to analyse your year-to-date profit and loss, assess your current drawings, and forecast your total income and super contributions. This transforms tax planning from a reactive chore into a proactive strategy. It gives you the power to make informed decisions mid-year, not after it’s too late. Effective, high-end tax advisory relies on real-time data, not historical guesswork.

Structuring and Cash Flow

A smart structure does more than just manage your tax obligations; it supports your long-term wealth creation and cash flow goals. If the division 293 tax makes extra super contributions less attractive, we help you build wealth elsewhere. This could mean using retained profits within your company to invest in commercial property or establishing a portfolio of shares through your trust. It’s a holistic approach. We work to find the perfect balance between your business needs, your personal lifestyle, and your retirement goals. At Brown Hamilton Partners, our role is to come alongside you to design a tax structure that builds a strong foundation for your family’s future.

Holistic Wealth Strategy: SMSF, Estate Planning, and Beyond

Understanding the mechanics of Division 293 tax is one thing. Integrating it into your long-term wealth strategy is where true financial security is built. This tax isn’t just an annual line item; it has real implications for your Self-Managed Super Fund (SMSF), your estate, and the legacy you leave behind. A holistic view moves you from simply paying a tax bill to strategically managing your entire financial world.

For high-income earners with an SMSF, this means proactive planning is essential. Your concessional contributions strategy must account for this extra 15% tax. Do you deliberately contribute just enough to stay below the threshold, or do you maximise your contributions for long-term growth and plan to pay the tax from your fund? There isn’t one right answer. The best path depends entirely on your personal cash flow, retirement timeline, and investment goals. Working with a specialist SMSF accountant can help you navigate the 2026 regulatory changes, including the increased concessional contribution cap and the Transfer Balance Cap, to ensure your fund is structured for maximum efficiency. Our detailed guide to the super contribution cap 2025 and FY26 limits can help you understand exactly how much you can contribute before triggering additional tax obligations.

Estate Planning and Superannuation Tax

A deferred division 293 tax debt can create an unexpected problem for your beneficiaries. When your super benefit is paid out upon your death, this accumulated tax liability is paid first, directly from your super balance. This reduces the final amount your loved ones receive. A robust estate plan accounts for this, ensuring your binding death benefit nominations and will work in harmony. You can explore our articles to learn more about aligning your estate and SMSF.

The Brown Hamilton Partners Difference

This level of integrated planning is why we are not “bean counter” accountants. We are wealth partners. A spreadsheet can’t understand your family dynamics or your vision for the future, but we can. Our 30-year history in Nunawading has given us the experience to solve the “out of the box” problems that arise when tax, business, and family life intersect. We are interested in what makes you tick, because that’s the key to building a strategy that truly works for you.

Your financial future deserves more than a reactive, once-a-year review. It requires a forward-looking partnership. The decisions you make today will directly shape your 2026 tax position and beyond. Let’s work together to ensure your strategy is robust, resilient, and ready for whatever comes next. Contact our team in Nunawading to secure your financial future.

Build Your Proactive Tax Strategy for 2026 and Beyond

Managing your superannuation effectively as a high earner in Nunawading goes beyond simply paying a bill. The key takeaways are clear: understanding the thresholds is just the start, and proactive planning is your most powerful tool. By strategically structuring your income and contributions now, you can mitigate future liabilities and ensure your wealth works harder for you. A properly managed division 293 tax liability is a sign of a well-executed financial plan.

At Brown Hamilton, we’ve spent over 30 years helping clients in Melbourne’s East build these plans. As a family-owned firm and specialists in high-end tax advisory, we believe in partnership. We come alongside you to understand your unique goals because you’re a partner, not a number. Don’t let tax complexities dictate your financial future. Take control today.

Book a Tax Strategy Review with our Nunawading Team and discover what it’s like to have a dedicated partner on your side.

Frequently Asked Questions About Division 293 Tax

Is Division 293 tax avoidable if I stop salary sacrificing?

No, stopping salary sacrificing won’t necessarily help you avoid this tax. The ATO’s calculation includes your taxable income plus all concessional super contributions, not just salary sacrificed amounts. For many high-income earners, your base salary and compulsory employer super guarantee contributions are enough to push you over the $250,000 threshold. It’s a common misconception that only voluntary contributions trigger the tax liability.

Can I appeal a Division 293 assessment if my income was a one-off spike?

Yes, you can lodge an objection to your assessment, but success isn’t guaranteed. The law doesn’t typically provide exceptions for one-off income spikes, such as from a capital gain or a large bonus. However, if there was a clear error in the information used by the ATO, an objection may be successful. It’s a complex area, and we recommend seeking professional advice to review your specific circumstances and the merits of an appeal.

How much time do I have to pay my Division 293 tax bill?

You have 21 days from the date your notice of assessment is issued to pay your bill or make an election for your super fund to pay it. The specific due date is always printed clearly on the notice you receive from the ATO. Acting promptly is important to avoid any late payment penalties. If you elect for your fund to pay, they are given a separate timeframe to release the money to the ATO on your behalf.

What happens if I don’t have enough money in my super to pay the tax?

If your super fund doesn’t hold enough money to cover the full tax amount, they will pay what they can and the ATO will ask you to pay the remaining balance directly. You cannot defer the payment. The ATO will issue you a new notice for the outstanding amount, which you are personally liable for. This ensures the full division 293 tax liability is settled, even if your super balance is low or in a fund with restricted access.

Does the Medicare Levy Surcharge affect my Division 293 threshold?

No, the Medicare Levy Surcharge (MLS) does not directly affect your Division 293 threshold. The income calculation for the MLS is different from the one used for Division 293. While both are related to high incomes, they are separate calculations with their own specific rules and thresholds. Your liability for one does not automatically trigger a liability for the other, although many people who pay the MLS also exceed the Division 293 threshold.

Is Division 293 tax deductible for my business or me personally?

No, Division 293 tax is not tax-deductible for you personally or for your business. It is considered an additional personal tax liability, similar to your regular income tax or the Medicare levy. While superannuation contributions made by your business are generally deductible for the business, the resulting Division 293 liability on those contributions for you as an individual cannot be claimed as a deduction on any tax return.

Can I pay my Division 293 tax bill using a credit card?

Yes, you can pay your Division 293 tax bill directly to the ATO using a credit or debit card. The ATO accepts payments via their online services, and you can use Visa, Mastercard, or American Express. Be aware that payments made by card may incur a card payment fee, which is a percentage of the transaction amount set by the Reserve Bank of Australia. This fee is not tax-deductible.

How does the ATO know my income if I haven’t lodged my return yet?

The ATO uses information reported directly by your employer and your superannuation fund to make a provisional assessment. Your employer reports your salary, wages, and super contributions throughout the year via Single Touch Payroll. Your super fund also reports all contributions it receives for you. The ATO uses this data to calculate your likely liability and may issue an assessment before you even lodge your personal tax return.