Div293 tax explained: what small business owners need to know

What is Div293 tax?

Div293 tax is another tax applied to high-income earners on some superannuation contributions.

It was introduced by the Australian Government to make super tax concessions fairer between lower-income and higher-income earners.

If your income and specific contributions push you above the Div293 threshold, you may need to pay this extra tax.

(Reference: ATO – Division 293 tax)

Who needs to pay Div293 tax?

You may be liable for Div293 tax if:

• Your income for Div293 purposes is more than $250,000 in a financial year, and
• You or your employer made concessional contributions (for example, super guarantee or salary-sacrificed contributions) to your super fund.

If you meet both conditions, you'll receive an assessment from the ATO.

How is Div293 tax calculated?

The ATO looks at two things:

1. Your income for Div293 purposes includes taxable income, reportable fringe benefits, total net investment losses, and certain super contributions.
2. Your concessional super contributions are contributions made before tax.

If your income for Div293 purposes plus concessional contributions is over $250,000, an additional 15% tax is applied on some or all of those contributions.

That means instead of paying 15% tax on concessional contributions, you may end up paying up to 30% on part of them.

(Reference: ATO – How Div293 tax is calculated)

How do you pay Div293 tax?

The ATO will send you a notice of assessment if you owe Div293 tax. You can choose to:

• Pay the amount directly to the ATO, or
• Release money from your super fund to cover the liability.

Your super fund will not automatically pay this tax on your behalf unless you authorise it.

What should small business owners watch out for?

Many business owners pay themselves a salary, make personal concessional contributions, or top up super via salary sacrifice. These contributions, combined with their business income, can easily push them into the Div293 zone without them realising it.

It's also worth noting:

• Timing matters: contributions made late in the financial year can unexpectedly trigger the threshold.
• Structuring your income: the way you draw income (salary vs. dividends vs. distributions) impacts whether Div293 tax applies.
• Cash flow planning: if you get hit with an assessment, you'll need to plan for how you'll pay it.

Where to get help

The ATO has clear resources on Div293 tax, including how it's calculated and how to pay it. See:

• ATO – Division 293 tax overview

How Thriday helps

While the Div293 tax only affects higher-income earners, it's a good example of how complicated the tax system can be. For small business owners, keeping track of income, expenses, super, and tax obligations is time-consuming.

That's where Thriday comes in. Thriday automates your bookkeeping, tax calculations, and reporting in real-time, giving you a clear view of your business health and helping you stay prepared for tax surprises.

With Thriday, you can:

• Track income and expenses automatically.
• See your tax position in real time.
• Plan for super contributions and cash flow.
• Confidently focus on running your business, knowing the numbers are under control.

✅ By educating yourself on Div293 tax, you've taken one step closer to being in control of your business finances. With Thriday, you can go further and eliminate the stress of financial admin altogether.

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