Compliance
Compliance Essentials: Division 296 Tax & Super Thresholds from 1 July 2026
Australia’s Division 296 tax introduces new tax on super earnings for people with large super balances—this article guides you through what you need to comply with starting 2026-27.
By NomadicTax Research Team • 5-8 min read • July 29, 2026
## Overview of Division 296 Tax
The Division 296 tax is a newly enacted law targeting individuals whose Total Superannuation Balance (TSB) exceeds **$3 million** in the 2026-27 financial year. Earnings on super above that threshold may incur an extra **15% tax**, and for balances over a $10 million threshold (the Very Large Super Balance Threshold), an additional 10% may apply. ([csc.gov.au](https://www.csc.gov.au/News-and-insights/2026/March-5-Division-296-tax?utm_source=openai)) Assessments under Division 296 begin from the year ended 30 June 2027.
## Who Needs to Know
- Individuals with super balances over **$3 million**: subject to extra tax on a portion of their earnings.
- Those over **$10 million**: even more exposed.
- Executors of estates, beneficiaries, or individuals approaching retirement who expect super balances to be large.
- Super funds themselves, though the liability is assessed on individuals, not funds.
## Key Obligations and Actions for Compliance
- **Tracking your Total Super Balance (TSB)**: All super accounts counted toward TSB—funds, investment returns, etc. Records must accurately reflect valuations.
- **Declarations and reporting**: The ATO will calculate extra tax, but individuals must ensure super funds are providing correct information.
- **Adjust investment strategies**: For balances near thresholds, consider investment allocations that may reduce taxable earnings.
## Practical Examples
- **Example 1**: Sarah has $2.8 million in super. She earns $150,000 in super earnings this year. Since she is under $3 million, she pays the standard 15% accumulation tax.
- **Example 2**: Michael has $4 million. Earnings over $3 million are split out, taxed at extra 15%. If part of his balance is over $10 million, that portion is taxed at an extra 10% beyond the base.
## Implications for Financial Planning
- Consider **timing withdrawals or rollovers** if close to threshold—though withdrawal opportunities are regulated.
- Review asset mix in super funds to perhaps marginally reduce earnings in years near threshold exposure.
- Plan for the extra tax in retirement cash flow projections, especially for those planning to live partially off super earnings.
## Actionable Steps
1. Contact your superfund to request TSB statements and projections.
2. Meet with a financial adviser to model “threshold scenarios.”
3. Review current and expected earnings – seek to smooth large income spikes or gains in years expected to breach thresholds.
4. Confirm how earnings will be reported by your superfund to align with ATO’s expectations.
## Summary
Division 296 changes are a major new compliance dimension for superannuation in Australia, especially as high-balance holders now face extra tax on earnings starting 1 July 2026. Proper record-keeping, balanced investment decisions, and awareness of thresholds are essential to manage liabilities effectively.