Tax Planning
Division 296 Tax: What High-Balance Super Members Need to Know from July 2026
From 1 July 2026, individuals with more than $3 million in super balances face a new tiered additional tax on earnings above thresholds – here's how it works and strategies to consider.
By NomadicTax Research Team • 5-8 min read • June 14, 2026
## What is Division 296 Tax?
Division 296 is a newly enacted tax targeting **superannuation earnings** for individuals whose **total superannuation balance (TSB)** exceeds certain thresholds. Effective from **1 July 2026**, the tax imposes **additional tax on earnings** above these thresholds at higher rates. ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai))
## Thresholds & Rates
| TSB Tier | Threshold | Additional Tax on Earnings of Portion Above Threshold |
|---|---|---|
| Tier 1 | Above **$3 million** and up to **$10 million** | **30% total** on earnings above $3M, i.e. extra **15%** above base rate ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai)) |
| Tier 2 | Above **$10 million** | **40% total –** an extra **25%** above base rate for amounts exceeding $10M ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai)) |
**Note:** These higher rates apply **only the excess earnings**, not the full super balance. Base tax rates apply to other earnings.
## Who Is Affected
- A very small minority of super fund members with balances above $3 million.
- Mainly high net-worth individuals, long-serving executives, or those with strong investment returns.
- Members of Defined Benefit schemes will see specific treatment still being finalised. ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai))
## Strategies and Considerations
- **Investment Return Planning:** Earnings from super above the threshold are taxed more heavily. Consider balancing return-risk profile, potentially reducing exposure to high-return/high-volatility assets for the portion above thresholds.
- **Consolidation of Super Accounts:** Multiple fund balances count toward your TSB. Merging accounts may help you manage exposure above these thresholds.
- **Contribution Caps & Timing:** Be mindful of contribution timing so any extra concessional or non-concessional amounts don’t push you significantly over thresholds.
## Example
Assume your **total superannuation balance** is **$4 million**:
- $3 million portion taxed at standard rates; \$1 million in excess taxed at **30% on earnings** above $3 million.
- If your earnings rate is 8% p.a., that means earnings of $80,000; $80,000 above first $3M taxed with extra 15% (making 30% total).
If your TSB were \$12 million, earnings above \$10M portion would also attract an additional 25% extra, so for those earnings you’d face a **40%** effective tax on that slice.
## Action Items for Super Members
- Review estimated **end-of-year TSB** to anticipate exposure.
- Adjust investment allocations for the portion of super balance prone to higher tax.
- Liaise with super fund to understand how earnings above thresholds will be calculated and reported.
- Seek personalised advice if in or near threshold bands to optimize tax outcomes.
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**Category:** Tax Planning
**Takeaway:** If your super balance surpasses \$3M, plan now for how that excess will be taxed under Division 296 – small changes before 1 July can help preserve value.