Division 293 Income Explained: What Counts and What Doesn’t

Key takeaways

• Division 293 income is not the same as your salary.
• It uses a broader income measure, similar to the Medicare levy surcharge approach.
• One off events can push you over the threshold for a single year.
• Most surprise assessments make sense once you know what is included.

If you want a quick estimate first, use my Division 293 calculator.

When people get caught by Division 293, the reason is usually simple. They assume income means salary.

It does not.

This page explains what counts as income for Division 293 purposes, what does not, and why one year can look very different from the next.

What Division 293 income actually means

For Division 293, the ATO uses an income calculation based on the same approach used for the Medicare levy surcharge, with specific adjustments.

It then adds your concessional contributions for Division 293 purposes to see whether the combined total exceeds $250,000 in a financial year.

That is why people can be under $250,000 on salary and still be assessed.

For the full picture of how the test works, see Division 293 tax explained.

What is included in Division 293 income

Division 293 income starts with your taxable income and then includes several add backs.

At a high level, it includes:

• Taxable income, after allowable deductions
• Total reportable fringe benefits amounts
• Net financial investment losses
• Net rental property losses
• Net amounts on which family trust distribution tax has been paid

These items matter because they can reduce taxable income while still reflecting your overall capacity to pay tax.

Amounts that are adjusted or excluded

Not every super related amount is treated the same way.

Certain amounts are subtracted in the Division 293 income calculation, including:

• Super lump sum taxed elements with a zero tax rate
• Assessable first home super saver released amount

If you are close to the threshold, these details can be the difference between paying Division 293 and not paying it.

Why one off events matter

Division 293 is assessed year by year.

That means a single event can trigger it even if your income is usually lower.

Common examples include:

• A capital gain from selling shares or property
• A bonus or back payment of salary or wages
• An eligible termination payment
• A temporary spike in income for another reason

In these cases, Division 293 often applies for one year only. If your income falls back below the threshold the next year, the extra tax may not apply.

This is also why it can feel unpredictable if you only look at salary.

What does not count as Division 293 income

A few things people worry about often are not the reason they were assessed.

For example:

• Division 293 is not based on salary alone
• Amounts staying inside super do not automatically count as income unless they are assessable
• Super guarantee amnesty contributions are excluded in most cases

If your notice looks wrong, it is often a reporting or return issue rather than a new rule.

If you are trying to work out whether the figures are sensible, run a quick estimate first with the Division 293 calculator, then compare it to your notice.

The interaction with concessional contributions

Division 293 uses two separate components:

• Division 293 income
• Division 293 super contributions

These are added together to test the $250,000 threshold.

If you use carried forward concessional contributions, those higher concessional contributions still count for Division 293 purposes. That catches people off guard because the cap can increase, but Division 293 still looks at the actual concessional contributions reported.

If you want to understand the contribution side in plain English, start with Division 293 tax explained and then use the Division 293 calculator to see how the pieces interact.

Why assessments can change

It is common to receive an amended Division 293 assessment.

This usually happens because:

• You have more than one super fund
• One fund reports contributions after you lodge your tax return
• Your income tax return is amended or corrected
• Your fund corrects contribution reporting

In other words, the ATO cannot finalise the assessment until it has both your tax return data and your contributions data.

Defined benefit members

Defined benefit members work a bit differently.

Instead of using actual concessional contributions, the ATO uses notional contributions based on the annual increase in the benefit you are expected to receive when you leave the fund.

That means your Division 293 position can be harder to predict by looking at payslips or contribution transactions.

If you are in a defined benefit fund, read this next: Division 293 for defined benefit members.

Putting income in context

Understanding Division 293 income does not mean you need to manage every dollar around it.

For most people, the goal is awareness. Knowing what counts explains why Division 293 applied and whether it is likely to apply again.

If you want the full step by step explanation, go back to Division 293 tax explained.

If you want a quick estimate before your notice arrives, use the Division 293 calculator.

Related reading

• Division 293 tax explained
• Division 293 calculator
• Paying Division 293 from super
• How to reduce Division 293 tax
• Division 293 for defined benefit members
• Is Division 293 tax unfair?

FAQs

Is Division 293 based on salary only?

No. Division 293 income includes taxable income plus several add backs, similar to the Medicare levy surcharge calculation.

Can a capital gain trigger Division 293 tax?

Yes. A capital gain can increase your Division 293 income for that year and push you over the $250,000 threshold.