Division 296
Super Tax guide
Last updated: 15 June 2026
Update #3
What the Super tax means for high-balance Superannuation members
What is Division 296?
Division 296 is a new tax measure that applies to individuals whose total superannuation balance exceeds $3 million.
Passed by Parliament in 2026, the measure represents one of the most significant changes to Australia’s superannuation tax system in recent years. It forms part of the Federal Government’s stated objective of reducing tax concessions for very large superannuation balances while maintaining superannuation as a vehicle for retirement savings.
Importantly, Division 296 does not impose tax on an individual’s entire superannuation balance. Instead, the additional tax applies only to the proportion of earnings attributable to the amount held above the $3 million threshold.
While the measure is expected to affect only a relatively small proportion of Australians, it is likely to become an important consideration in retirement planning, wealth management and SMSF strategy.
When does Division 296 commence?
The legislation has passed and is scheduled to commence from 1 July 2026 and will first apply to the 2026-27 financial year.
The first assessments are expected to be issued during the 2027-28 financial year.
Who may be affected?
Division 296 may apply to individuals whose total superannuation balance exceeds $3 million.
The threshold applies across all superannuation interests, including:- Self-managed super funds (SMSFs)
- Industry super funds
- Retail super funds
- Public sector funds
- Retirement-phase accounts
The assessment is based on an individual’s total superannuation position, rather than the balance of any single fund.
How does Division 296 work?
Individuals with total superannuation balances above $3 million may be subject to additional tax on earnings attributed to the portion of their balance above the threshold.
The measure applies in tiers. Earnings attributed to balances above $3 million may be subject to an additional 15% tax. A further tier applies to very large balances above $10 million.
The additional tax applies only to earnings associated with the relevant portion of the balance, not the entire superannuation balance.
Are unrealised gains included?
- Direct property
- Private business interests
- Unlisted investments
- Assets with significant valuation movements or liquidity considerations
Is the $3 million threshold indexed?
The $3 million and $10 million thresholds are expected to be indexed.
Even so, individuals with growing superannuation balances may wish to monitor their position over time, particularly where investment returns, contributions or asset values may move them closer to the thresholds.
How will the tax be paid?
Division 296 creates a personal tax liability for the individual, rather than a liability of the superannuation fund.
The Australian Taxation Office (ATO) will calculate any liability using information reported by superannuation funds.
Affected individuals may generally:- Pay the liability personally; or
- Elect to release funds from their superannuation account to meet the obligation.
Is there a planning opportunity before the rules commence?
The commencement of Division 296 may create an opportunity for affected individuals to review their superannuation position before the rules begin to apply.
Depending on individual circumstances, this may include reviewing:- Superannuation balances
- Asset valuations
- Investment structures
- Contribution strategies
- Liquidity requirements
- Estate and wealth transfer arrangements
Any decision should be considered carefully, as changes to superannuation arrangements may have broader tax, investment, retirement and succession planning implications.
What should affected individuals consider?
For individuals with balances approaching or exceeding $3 million, Division 296 may have implications beyond superannuation alone.
It may be appropriate to review:- Current superannuation balances
- Exposure to the Division 296 thresholds
- SMSF investment structures
- Asset liquidity and valuation issues
- Estate planning arrangements
- Broader wealth management strategies
Talk to LDB
At LDB, our accountants and tax advisors in Blackburn, Melbourne, can help you interpret the Division 296 reforms, model your superannuation exposure and ensure your records are accurate as legislation evolves.
Call us today on (03) 9875 2900 or get in touch online to discuss how these superannuation tax changes may affect you.
Or you can follow LDB on LinkedIn for updates on tax, superannuation and business advice.
Frequently asked questions about Division 296
No. The measure is intended to apply only to individuals whose total superannuation balance exceeds $3 million.
No. The additional tax applies only to the proportion of earnings attributable to the amount above the $3 million threshold.
Contact Us
Get help with your superannuation today
Drop us a line and have a chat today.
Contact us sidebar
"*" indicates required fields
Subscribe
Get LDB insights in your inbox
Sign up to our newsletter for the latest news, tips, and important reminders from LDB.
HOW CAN WE HELP?
