Tax Planning
Division 296 Super Taxes: When Your Super Balance Stops Working For You
For very high super balances above $3 million—or $10 million—you’ll face extra taxes on earnings above those thresholds from 1 July 2026.
By NomadicTax Research Team • 5-8 min read • August 7, 2026
## What is Division 296 tax?
**Division 296** introduces a new tax specifically targeting super balances that exceed certain thresholds. From **1 July 2026**, individuals with a Total Super Balance (TSB) over **$3 million** may face a **15% tax** on earnings associated with the super balance above that threshold. If their TSB exceeds **$10 million**, an additional **10% tax** applies on the earnings above that very large threshold. ([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))
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## Who is affected?
- **APRA-regulated funds** & **self-managed super funds** (SMSFs). If your combined super across funds surpasses the thresholds at year-end, your earnings above those levels are taxed more heavily.
- The tax applies **only** on the portion of earnings that **correspond** to what is over the threshold—not your entire balance.
- Thresholds may be **indexed** in line with inflation/CPI in coming years. ([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))
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## When will you receive this tax assessment?
Notice of assessments under Division 296 will be issued in **the latter half of the 2027-28 financial year** for earnings and balances relating to the **2026-27 financial year**, once your fund reports relevant earnings. ([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))
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## Practical Examples
- **Example 1**: If you finish 30 June 2027 with a TSB of **$4 million**, you're $1 million above the $3 million threshold. Suppose your fund earns $100,000 in relevant earnings that year; **15% of the earnings attributable to the excess $1 million** will be taxed more by Division 296.
- **Example 2**: If your balance is $12 million, first $3 million is standard; next $7 million is taxed per the 15% rate; the **$2 million above $10 million** has an additional **10%** rate on those portioned earnings.
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## Tax-Planning Strategies to Consider
- **Consider rolling over or equalising balances**: Diversifying super funds or making contributions/withdrawals that shift your balance below thresholds.
- **Monitor investment earnings**: Seek funds that have stable or defensive earnings above thresholds during high-volatility periods.
- **Spread earnings where possible**: Some fund-level decisions may help smooth earnings. But tax isn't avoidable—only optimised.
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## What to Watch Out For
- Ensure accurate tracking of **all your super funds**—administered or self-managed. Don’t miss hidden balances.
- Don’t assume high earnings indicate automatic liability—only earnings corresponding to the excess over thresholds are taxed.
- Keep detailed records; you may need reporting from your fund or fund administrator.
By understanding Division 296 now and using proactive strategies, very super-rich Australians can better anticipate their liabilities and structure their portfolios accordingly.