Super Update: Division 296 Legislation Passed — Key Changes for High-Balance Super Holders
On 10 March 2026, the Federal Parliament passed the long-anticipated Division 296 tax, marking one of the most significant changes to Australia’s superannuation framework in recent years.
These reforms introduce an additional personal tax on the earnings attributable to the portion of an individual’s total super balance above $3 million, applying from 1 July 2026. The tax applies only to realised earnings, not unrealised gains.
Key Takeouts
- The Senate passed the relevant bills on 10 March 2026; they now await Royal Assent.
- The tax will apply to individuals with super balances above $3 million, with a higher tax levied on earnings linked to balances above $10 million. Both thresholds will be indexed.
- The tax applies only to realised earnings, and only to the proportion of earnings associated with the balance above the relevant thresholds.
- Division 296 begins 1 July 2026, with liabilities assessed after 30 June 2027.
- Defined benefit pensions will also be captured under the new rules.
How We Can Support You
- Assess whether you are likely to fall within the new thresholds
- Clarify how the tax will apply to your specific circumstances
- Evaluate whether any pre-emptive actions may be beneficial
- Integrate these changes into your broader retirement and wealth strategies
Division 296 Tax Explained
- Division 296 is levied on the member, similar to Division 293 (which applies to contributions). Once you receive a Division 296 Notice of Assessment, you can choose to pay it personally or release the amount from your super fund.
- It is not the full earnings that are taxable — only the proportionate share linked to the amount over the threshold.
- The tax will apply if your total super balance (TSB) at either the beginning or end of the financial year exceeds $3 million. This means division 296 may not necessarily be avoided by reducing the TSB prior to the end of the financial year.
- Exception for the first year: For the 2026–27 income year, only your TSB at 30 June 2027 will determine whether Division 296 applies.
- There are Two Key Thresholds
| Large superannuation balance threshold | $3m Indexed in increments of $150,000 An additional 15% tax applies on the proportion of earnings above the threshold. |
| Very Large Superannuation balance threshold | $10m Indexed in increments of $500,000A further 10% tax applies on the proportion of earnings above the threshold. This means proportion of earnings linked to the balance above $10m is taxed at an additional 25% |
Two Simple Examples
| TSB greater than $3m | Assume a TSB of $4m at 30 June 2027 and total superannuation earnings of $200,000. Proportion of TSB above $3m threshold = $1m (25% of $4m balance) Taxable earnings for division 296 purposes = 25% of $200,000 superannuation earnings = $50,000 15% Division 296 tax liability = 15% x $50,000 = $7,500 |
| TSB greater than $10m | Assume a TSB of $12m at 30 June 2027 and total superannuation earnings of $600,000. Proportion of TSB above $3m threshold = $9m (75% of $12m balance) Proportion of TSB above $10m threshold = $2m (16.67% of $12m balance) Taxable earnings for division 296 purposes has two calculations: Proportion of earnings above $3m threshold = 75% of $600,000 superannuation earnings = $450,000Division 296 tax liability = 15% x $450,000 = $67,500 Plus Proportion of earnings above $10m threshold = 16.67% of $600,000 superannuation earnings = $100,020Division 296 tax liability = 10% x $100,020 = $10,002Total Division 296 tax liability = $67,500 + $10,002 = $77,502 Note the $2m above the $10m threshold is counted in both calculations – a tax rate of 25% on the amount over the very large super balance threshold. |
Please note these simple examples are illustrative only and not intended to be a detailed calculation of all elements of the legislation.
Get in Touch
Contact us if you would like personalised guidance on how the new Division 296 rules may affect you.
We are here to ensure you feel informed, supported, and confident as these changes roll out.
Susan Buda ASIC No. 431563 is a Representative of Focus Partners Australia Wealth Pty Ltd a Corporate Authorised Representative of Focus Partners Wealth Pty Ltd AFSL No. 234525
Disclaimer:
The information above is general in nature and does not take into account your objectives, financial situation, or needs. You should consider whether this information is appropriate for you and seek personalised advice before making any financial decisions. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at 10 March 2026. In some cases, the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change.