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Expert attention to the complex paperwork required for self managed super funds
Protect Your SMSF Cash Flow from Surprise Tax
If you’ve recently received a notification from the ATO regarding a Division 293 tax assessment, you’ve officially hit a milestone in your earning career. While it feels like a penalty for success, it is essentially the government’s way of reducing the tax concession on super contributions for high-income earners. The frustration isn’t just the extra 15% tax; it’s also the fact that it can disrupt your cash flow and complicate the accounting of your Self-Managed Super Fund (SMSF).
At SMSF Loan Experts, we work with high-value trustees to ensure these tax obligations don’t stall their investment momentum. Whether you are looking for how to reduce the Division 293 tax through smarter contribution timing or you need to understand further how this tax impacts your fund’s borrowing capacity for property, we can provide the clarity you need. Our team moves the conversation away from “How much do I owe?” to “How do we structure the fund to thrive regardless?”
What is the Division 293 Tax?
In simple terms, Division 293 tax in Australia is an additional tax imposed on the concessional (before-tax) super contributions of individuals whose combined income and super contributions exceed a specific limit. While most people pay a flat 15% tax on their super contributions, those affected by Division 293 pay an additional 15%, bringing the total tax rate to 30%.
It is important to note that even with this “extra” tax, you are still likely paying less tax on that money than you would at the top marginal individual rate. However, the calculation is nuanced. The Division 293 tax threshold currently sits at $250,000. If your income for surcharge purposes plus your low-tax contributions cross this line, the ATO will be in touch.
How is Division 293 Calculated?
Understanding the mechanics of Division 293 tax is the first step in managing it. The ATO doesn’t just look at your base salary; they look at your combined income, which is essentially your taxable income plus your concessional super contributions.
The tax is 15% of the lesser of two amounts:
1. The amount that exceeds the Division 293 tax threshold ($250,000).
2. Your total low-tax (concessional) super contributions for the year.
Meet Sarah. She’s a senior executive with a steady salary and standard super.
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Taxable Income: $240,000
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Super Contributions (SG): $28,800
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Combined Income: $268,800
The Calculation: Sarah’s combined income exceeds the $250,000 threshold by $18,800. Since this excess ($18,800) is less than her total super contributions ($28,800), the 15% tax is only applied to the excess.
Division 293 Tax Assessment: $18,800 × 15% = $2,820
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Meet Marcus. He earns well above the threshold and maximises his super every year.
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Taxable Income: $350,000
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Super Contributions (Cap): $30,000
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Combined Income: $380,000
The Calculation: Marcus is over the threshold by $130,000. However, the law states you only pay the tax on the lesser of the excess or the contributions. Since his total concessional contributions ($30,000) are much lower than his $130,000 excess, the tax applies to the full $30,000.
Division 293 Tax Assessment: $30,000 × 15% = $4,500
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Meet Elena. She usually earns $180,000, but in 2026, she sold an investment property, triggering a $100,000 capital gain.
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Regular Income: $180,000
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Net Capital Gain: $100,000
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Super Contributions: $21,600
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Combined Income: $301,600
The Calculation: Even though Elena isn’t a permanent high-earner, the Division 293 tax issued by the ATO only looks at the current year. She is over the threshold by $51,600. Because her super contributions ($21,600) are the lesser amount, she pays 15% on that entire sum.
Division 293 Tax Assessment: $21,600 × 15% = $3,240
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When is the Division 293 Tax Payable?
Unlike your standard income tax, this isn’t something you pay through your employer’s PAYG system. The ATO issues a separate notice after they have processed both your personal tax return and your SMSF’s annual return.
When that notice arrives, you generally have two choices:
Pay it personally:
Use your own out-of-pocket cash to keep your super balance intact.
You have 21 days to settle your Division 293 notice. It’s a tight window, so acting quickly is the best way to avoid unnecessary costs.
Use your fund:
Many trustees prefer paying Division 293 tax from their super as it preserves personal liquidity. You can choose to release the funds from your SMSF, though you must follow the formal election process through the ATO online services.
Can You Reduce the Impact?
While you cannot technically opt out, there are sophisticated ways to look at how to mitigate Division 293 tax triggers in future years. This might involve timing the disposal of assets to manage capital gains or looking at “catch-up” contribution strategies in years when your income fluctuates below the threshold.
At SMSF Loan Experts, we don’t believe in “one-size-fits-all” advice. We look at your total financial picture. If you are using your SMSF to leverage into commercial or residential property, an unexpected Division 293 tax can affect your fund’s liquidity. We help you plan for these payments so they never jeopardise your loan repayments or your property acquisitions.
Frequently Asked Questions (FAQs)
Get in Touch with Us
Dealing with the complexities of Division 293 tax is a sign that your wealth is growing—but it’s also a sign that your financial structure needs to be more robust. Don’t treat this as a simple bill to be paid and forgotten. Treat it as a prompt to review your entire SMSF lending and investment strategy.
At SMSF Loan Experts, we help high-achieving Australians master their super. Whether you’re navigating tax assessments or looking to leverage your fund for high-value property, we provide the expertise that big banks simply can’t match. Get in touch with us today, and speak with an expert who understands the complexities of high-value funds.
How Our Super Fund Loan Process
Works
Our streamlined process ensures you get the best SMSF loan with minimal hassle.
Here’s how it works:
How Our Super Fund Loan Process
Works
Our streamlined process ensures you get the best SMSF loan with minimal hassle.
Here’s how it works:
Assess and Plan
We assess your situation and explore
lending options to plan your investment
strategy.
Apply and Negotiate
We manage the loan application and
negotiate with lenders to get you the best
terms and rates.
Fund and Implement
Once approved, we ensure quick
disbursement and assist with your
investment strategy, providing ongoing
support as needed.
Our Services
Whether you're looking to refinance an existing SMSF loan or need finance to buy a property investment in super, our experienced team of self-managed superannuation fund service providers can help you find the right SMSF loan.
Residential SMSF Property Loans
As a self managed super fund SMSF trustee, borrowing to purchase an investment property could be the financial kick-start you’ve been searching for. We can help you access the best finance solutions to purchase your investment. Our strategies help to maximise the growth of your SMSF residential investment property.
SMSF Loan Refinance
If your residential or commercial property loan is more than 2 years old, you could be missing out on more competitive products recently released to the market. We compare products and strategies with your finance needs, to match you with the most cost-effective loan for your circumstances.
SMSF Setup
Ensure your self managed super fund is set up correctly and compliantly. We help with the set up of your fund, all the way through to the settlement of your property - we can even organise to have your loan pre-approved before your super fund has been established.
Commercial SMSF Property Loans
Looking for a loan to purchase a commercial investment property inside of super? With access to a number of commercial loan products, we can build a tailored investment strategy for your self managed super fund commercial property investment.
SMSF Lending Strategy
Our goal is to find the right Self Managed Super Fund lending strategy for you. Investing in property within your SMSF can be complicated - Our experts help simplify the whole process.
Bad Credit SMSF Loans
Having a bad credit score doesn’t have to mean you miss out on borrowing to invest or get stuck with high interest rates. At SMSF Loan Experts, we offer lending solutions especially geared for clients with a less than perfect credit history.
Low Interest Rate & Flexible SMSF Loans
Access Ultra-competitive SMSF loan rates with unrivalled property flexibility.
Frequently Asked Questions About
SMSF Loans
Common Questions Answered
Yes, SMSFs can borrow money for property, managed funds, or shares using a
Limited
Recourse Borrowing Arrangement (LRBA)
. This process is heavily regulated, so
getting expert advice is recommended. Contact us for more details.
Navigating through property investments within an SMSF involves various
considerations such as property values, regulatory changes, interest rates, tenant
occupancy, and financial liquidity. Working closely with experienced experts can help
manage these factors effectively and ensure the stability and growth of your
investment portfolio.
ENQUIRE NOW
Free SMSF Finance Session
Contact us today, or schedule a phone meeting with an SMSF Loan Expert to make sure you get the right SMSF Lending advice 1300 781 680