Tax Planning
Australia’s Division 296 Tax: What Superannuation Members Need to Know from 1 July 2026
Starting 1 July 2026, Australians with super balances above $3 million face new tax on earnings—here’s what you need to know and how to manage.
By NomadicTax Research Team • 5-8 min read • July 29, 2026
## What Is Division 296 Tax?
The Division 296 tax is a change introduced by the Australian Taxation Office (ATO) that imposes **additional tax** on *superannuation earnings* if your **Total Super Balance (TSB)** exceeds certain thresholds. It will **take effect from 1 July 2026**. ([community.ato.gov.au](https://community.ato.gov.au/s/article/a07Mo00001w0qcO/what-division-296-tax-changes-means-for-your-super-balance?utm_source=openai))
### Thresholds for 2026-27 Financial Year:
- **Large Super Balance Threshold (LSBT)**: $3 million
- **Very Large Super Balance Threshold (VLSBT)**: $10 million
If your TSB **exceeds $3 million**, the earnings proportional to the excess will be taxed at **15%**. If over **$10 million**, that portion above $10 million gets an additional **10% tax**. ([community.ato.gov.au](https://community.ato.gov.au/s/article/a07Mo00001w0qcO/what-division-296-tax-changes-means-for-your-super-balance?utm_source=openai))
## How It’s Calculated
- TSB is assessed at **end of financial year**.
- Some funds will also consider balance **just before financial year** starts. The greater of the two may apply in future years.
- Only earnings related to the amount exceeding the thresholds are taxed at the higher rates. ([community.ato.gov.au](https://community.ato.gov.au/s/article/a07Mo00001w0qcO/what-division-296-tax-changes-means-for-your-super-balance?utm_source=openai))
## Who This Applies To
- **Members of super funds** whose total super assets are held in one or more super funds; includes SMSFs (Self-Managed Super Funds).
- It’s **not all super balance** that’s taxed—only the earnings portion above LSBT/VLSBT thresholds.
- Super funds will report relevant earnings to ATO; you'll see assessments later. ([community.ato.gov.au](https://community.ato.gov.au/s/article/a07Mo00001w0qcO/what-division-296-tax-changes-means-for-your-super-balance?utm_source=openai))
## Timeline and Reporting
- Financial year **2026-27** starts 1 July 2026—first year the threshold applies.
- Notices of assessment from ATO are expected to be issued in **latter half of 2027-28** when super fund earnings are reported. ([community.ato.gov.au](https://community.ato.gov.au/s/article/a07Mo00001w0qcO/what-division-296-tax-changes-means-for-your-super-balance?utm_source=openai))
## Practical Strategies to Consider
- Consolidate **multiple super accounts** to avoid reaching TSB thresholds unintentionally.
- Review fund performance—super funds with lower earnings may reduce Division 296 tax exposure.
- Plan timing of withdrawals if eligible or needed.
- Consult financial & tax advisor, especially for SMSFs, to understand your fund’s exposure and reporting obligations.
## Example Scenarios
1. **TSB of $4 million**:
- $3M threshold → first $3 million earnings taxed normally
- $1M excess earnings taxed at **15%** above threshold
2. **TSB of $12 million**:
- Earnings on first $10M: taxed normally or under regular super tax rules
- Earnings on $2M above VLSBT taxed at **15% + 10% extra** = **25% total tax** on that segment
## Key Takeaways
- If you expect your TSB to exceed $3 million in 2026-27, assess your strategy now.
- Understand what portion of your earnings above thresholds will face the higher rates—not whole account.
- Watch for your super fund’s reporting and assessment in 2027-28.
- These rules represent a growing trend globally: taxing wealth or earnings over high wealth thresholds.
**Bottom line**: Division 296 makes Australian super earnings over certain high-balance thresholds subject to layering tax, so high-balance super owners must plan carefully.