When this article was first published in October 2025, it outlined proposed changes to the Better Targeted Superannuation Concessions (BTSC) policy. Since then, the legislation has passed Parliament and commenced from 1 July 2026. While it retained the Government’s objective of reducing tax concessions for very large superannuation balances, several aspects of the proposal changed during the legislative process, making Division 296 one of the most significant changes to the taxation of high superannuation balances in recent years.

The legislation now provides:

• Division 296 applies to individuals whose total superannuation balance exceeds $3 million.
• An additional 15% tax may apply to earnings attributable to the portion of a balance above the threshold.
• The legislation first applies to the 2026-27 financial year.
• The additional tax is assessed to the individual rather than the superannuation fund.
• The Australian Taxation Office (ATO) calculates the liability using information reported by superannuation funds.

How the final legislation differs from the original October 2025 proposal

Compared with the proposals discussed when this article was first published, the enacted legislation:

• commenced from 1 July 2026;
• retains the inclusion of unrealised gains within the legislated earnings calculation;
• does not index the $3 million threshold; and
• continues to assess the liability to the individual rather than the superannuation fund.

For a detailed explanation of how Division 296 works, read our complete Division 296 guide.

What should affected individuals consider?

Individuals with balances approaching or exceeding $3 million may wish to review:

• Their current total superannuation balance
• Asset valuations within their super fund
• Their investment structure and liquidity
• Their broader retirement and wealth planning strategy

The most appropriate response will depend on individual circumstances and should be considered in conjunction with professional advice.

What the legislation means now

With the legislation now enacted, there is greater certainty around how Division 296 will operate.

While relatively few Australians are expected to be directly affected, the reforms highlight the importance of reviewing larger superannuation balances as part of a broader financial strategy.

For many individuals, the implications extend beyond superannuation and may influence retirement planning, estate planning, investment structures and long-term wealth management decisions.

For most Australians, Division 296 is unlikely to have any immediate impact. However, individuals with larger superannuation balances or complex SMSF structures may wish to understand how the legislation fits within their broader retirement and wealth planning.

Talk to LDB

Division 296 represents a significant change to Australia’s superannuation tax system, but its impact will vary depending on individual circumstances.

Reviewing your position early may help identify opportunities and ensure future decisions remain aligned with your long-term retirement and wealth objectives. For a detailed explanation of how Division 296 works, read our complete Division 296 guide.

If you would like to discuss how the legislation may affect your circumstances, LDB’s superannuation, tax and wealth specialists can help you understand the implications as part of your broader financial plan.

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