Division 293 tax explained for SMSF members (2026)

Division 293 tax is an additional 15% tax on concessional (before-tax) super contributions for people whose combined income and contributions exceed $250,000 in an income year. It is not an SMSF-specific tax — it applies to every super fund member — but SMSF trustees have to handle the release authority paperwork themselves, which is where most of the confusion sits. This guide explains what Division 293 tax is, how the threshold is worked out, and the exact process for paying the liability from your SMSF.

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01What is Division 293 tax?

Concessional contributions — employer Super Guarantee, salary sacrifice and personal deductible contributions — are normally taxed at 15% inside your super fund. Division 293 of the Income Tax Assessment Act 1997 adds a further 15% on some or all of those contributions for higher-income earners, taking the effective rate to 30%. That is still below the top marginal rate, so salary sacrificing usually remains tax-effective even when Division 293 applies.

02The $250,000 threshold — how it is calculated

The ATO adds two figures together: your 'Division 293 income' (broadly taxable income, plus reportable fringe benefits, plus net investment losses and a few other add-backs) and your 'low-tax contributions' (essentially your concessional contributions, capped at the concessional cap). If the total exceeds $250,000, the extra 15% applies to the lesser of your low-tax contributions and the amount above the threshold.

03When does the assessment arrive?

The ATO cannot assess Division 293 until it has both your personal tax return and your fund's reporting for the year. For SMSF members that means the assessment typically arrives after the SMSF annual return has been lodged — often well over a year after the contributions were made. A late-lodged SMSF annual return delays the assessment, it does not avoid it.

04How SMSF members pay Division 293 tax

You have two options once the assessment arrives: pay it from your own money, or release it from super. Many members choose to release it, because the liability arose from money that went into super in the first place.

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1. 1The ATO issues the Division 293 notice of assessment to you personally, with a due date for payment.
2. 2If you want the fund to pay, you complete an election in ATO online services (via myGov) nominating the super fund and the amount to be released — up to the assessed liability.
3. 3The ATO sends a release authority to your SMSF.
4. 4The trustee pays the released amount to the ATO within 10 business days of the date of the release authority.
5. 5The ATO applies the released amount against the assessment and refunds any excess to you.
6. 6The trustee records the payment as a reduction of the member's accumulation balance and reports it in the fund's accounts and annual return.

05Can Division 293 be released from a pension account?

Generally no. Amounts can only be released from accumulation-phase interests. If your entire balance is supporting a retirement-phase pension, there is nothing available to release and you will need to pay the assessment personally. This is a common surprise for members who commence a pension shortly after a high-income year.

06Should you stop salary sacrificing?

Usually not. At 30%, concessional contributions are still taxed well below the 45% top marginal rate plus Medicare levy. Division 293 reduces the benefit of salary sacrifice, it rarely eliminates it. Where it does change the maths is for members close to the threshold who could otherwise use carry-forward unused concessional cap amounts in a lower-income year instead.

07How fixed-fee administration helps

The practical difficulty with Division 293 is timing and tracking: the assessment lands long after the contribution year, the release authority has a tight deadline, and the payment must be reflected correctly in the member's balance and the fund's annual return. easySMSF's fixed monthly administration fee covers contribution tracking against the concessional cap, flagging members who are likely to be assessed, actioning release authorities within the statutory window, and recording the release correctly in the fund's accounts — with no extra charge when an assessment arrives.

General information only — not personal financial or tax advice. Division 293 outcomes depend on your individual income and contributions. Speak with a registered tax agent about your circumstances.