General Advice Warning. This article contains general information only and does not consider your personal objectives, financial situation, or needs. It is not personal financial product, tax, credit, or legal advice. Examples and figures are illustrative only — individual outcomes vary. Before acting on any information, seek personal advice from a qualified adviser.
If you're a specialist earning above $250,000, you're paying Division 293 tax — an extra 15% on your concessional super contributions. Most doctors at this income level pay it. Few have a strategy to manage its impact.
This article explains what Division 293 actually is, why it disproportionately affects doctors, and the six legitimate strategies we use with our medical clients to minimise its long-term cost.
What Division 293 is, in plain English
Concessional super contributions (employer Superannuation Guarantee plus any salary sacrifice or personal deductible contributions) are normally taxed at 15% inside the super fund — much lower than your marginal rate.
For most Australians, that's a significant tax saving. But the system has a brake. When your total income (including those concessional contributions) exceeds $250,000 in a financial year, an additional 15% tax — Division 293 — applies to the contributions that pushed you above the threshold.
The result: instead of paying 15% inside super, you effectively pay 30% on the relevant contributions. Still less than the marginal rate of 47% you'd pay on the same dollars taken as salary, but materially more than you'd pay below the threshold.
Why this hits doctors specifically
Three structural features of medical practice push doctors above the $250,000 Division 293 threshold more frequently than other high-income professionals:
Income is concentrated rather than spread. A specialist's income arrives mostly through one or two channels (hospital salary plus private billings), making the total visible and unavoidable. Other high-income professionals often have more income smoothing through trusts, partnerships, or company structures.
Compulsory Superannuation Guarantee contributions count toward the threshold. A hospital-employed specialist on $400,000 already has $46,000+ of SG contributions counted in their Division 293 calculation before they choose to contribute another dollar.
Career progression pushes income up fast. A registrar may be well under the threshold; ten years later as a senior specialist, they're well over it. Strategies that worked early in a career may need restructuring.
The mathematics in a representative case
Consider an illustrative specialist with total income of $400,000 and $30,000 of concessional super contributions:
- Income above threshold = $400,000 − $250,000 = $150,000
- All $30,000 of concessional contributions are within that excess
- Division 293 tax = 15% × $30,000 = $4,500 additional tax
Over a 25-year career, that's $112,500 paid in Division 293 alone — not counting investment growth on those dollars if they'd compounded inside super. The figure is illustrative only and depends on income trajectory, contribution levels, and tax law changes over time.
Six legitimate strategies for managing Division 293
Strategy 1 — Time concessional contributions when total income is lower
Division 293 applies based on the financial year of contribution. If your income varies significantly between years (e.g. gap years, sabbaticals, transition between roles, partial-year specialty changes), structuring concessional contributions toward lower-income years can save 15% on those dollars.
This works particularly well for:
- Doctors transitioning from hospital salary to private practice (often a temporary income dip)
- Doctors taking sabbaticals or extended leave
- Doctors with variable locum income year to year
- Doctors approaching retirement reducing clinical workload
Strategy 2 — Use the carry-forward provision
If your total super balance is below $500,000 at the start of the financial year, unused concessional contribution cap from the previous five years can be carried forward. This means you can potentially make a much larger concessional contribution in a lower-income year — using up to $150,000 of cap space at the lower-tax-rate moment.
A typical use case: a registrar contributes only the SG minimum ($24,000) in each year. As a new specialist with a one-time income dip, they contribute $80,000–$100,000 in a year where their total income happens to be below $250,000. Division 293 doesn't apply to that year, and the carry-forward cap is used efficiently.
Strategy 3 — Salary sacrifice over personal deductible contributions
For employee specialists, salary sacrifice arrangements deduct contributions directly from gross salary before they ever hit your taxable income. The PAYG withholding is reduced in real time, and the contributions are made automatically each pay period.
The mechanical effect is similar to personal deductible contributions, but the cash flow is smoother and you avoid the year-end administrative burden of claiming a personal deduction. For doctors with variable monthly income, salary sacrifice can also smooth your contribution patterns across the year, helping you stay below the threshold in some months even when annual income is above it.
Strategy 4 — Spouse contribution splitting
If you have a spouse earning significantly less than the $250,000 threshold, splitting your concessional contributions to their account can be valuable.
The legitimate mechanism is the concessional contribution split: after making contributions to your account in one financial year, you can request that up to 85% of those contributions be transferred to your spouse's super account in the following financial year. This shifts the future investment earnings into your spouse's super (often at lower tax rates over time) and can equalise super balances for transfer balance cap purposes in retirement.
This is particularly useful for couples where one partner is a high-earning specialist and the other works part-time or as a primary carer.
Strategy 5 — Time large capital events relative to contributions
If you're planning a capital event that will push your taxable income temporarily higher — selling an investment property, exercising employee share options, receiving a large one-off bonus — coordinate your concessional contribution timing.
In the year of the capital event, contributions above the threshold attract full Division 293. The year before or after may be substantially better.
This requires forward planning, typically with your accountant and financial adviser coordinated, but the savings can be material.
Strategy 6 — Coordinate across all your tax positions
Division 293 doesn't sit in isolation. The decision to contribute (or not) interacts with:
- Personal marginal tax rate that year
- Investment property cash flow (rental income, depreciation, interest deductions)
- Capital gains realisations
- Family trust distributions (if applicable)
- Spouse's income and contribution position
In our experience, the doctors who pay the least Division 293 over a career aren't the ones who skip contributions — they're the ones whose contribution strategy is coordinated with every other tax decision they make each year. One adviser holding all the variables produces better outcomes than five separate professionals each optimising their own slice.
What Division 293 strategy is not
A few things worth being clear about, because they come up in client conversations:
It's not avoidance. Division 293 strategies discussed here are explicitly contemplated by the legislation and the ATO. Carry-forward provisions, spouse contribution splitting, salary sacrifice timing — all legitimate.
It's not tax-free. Concessional contributions taxed at 30% after Division 293 are still better than the same dollars taxed at 47% as salary, but they're not the 15% rate that lower-income earners enjoy. Strategy is about minimising additional cost, not eliminating it.
It's not a one-time decision. Division 293 strategy should be reviewed annually as your income, family situation, and projected career trajectory evolve. What's right at age 38 may be wrong at age 52.
Common mistakes we see
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Stopping super contributions entirely because of Division 293. Even at 30% effective tax inside super, contributions are usually still more efficient than the 47% paid on equivalent salary.
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Failing to use carry-forward cap when total super balance is below $500k. Lots of doctors don't realise they have several years of unused cap quietly accumulating.
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No coordination between contributions and large capital events. A property sale in the same year as a maximum contribution can push the Division 293 impact much higher than necessary.
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Spouse super never optimised. A non-working or lower-earning spouse's super is often the most efficient destination for additional contributions, but goes unused.
What to do next
If your total income is above $250,000 and you've never specifically modelled your Division 293 position year-on-year, you almost certainly have unaddressed leakage. The amounts compound for the rest of your career.
Use MNM Group's super strategy calculator to model an indicative projection of your super position at retirement under three scenarios. Or book a free 15-minute consultation for personal advice on your specific Division 293 strategy.
This article provides general information only and does not constitute personal tax or financial product advice. Tax outcomes depend on individual circumstances and current tax law. Division 293 rules, super contribution caps, and threshold amounts change. Specific tax advice from a registered tax agent is required before any structural change. MNM Group Financial Services Pty Ltd · ABN 52 934 978 906 · AFSL 503737.