Compliance
Getting Ready for Super Changes: What Employers and Super Funds Should Know About Division 296
A practical guide through the Better Targeted Superannuation Concessions changes (Division 296) that start 1 July 2025—how your reporting, systems, and communications need to evolve.
By NomadicTax Research Team • 5-8 min read • March 6, 2026
## What is Division 296 / Better Targeted Superannuation Concessions (BTSC)?
This measure alters tax concessions on **earnings for superannuation balances over $3 million**. From **1 July 2025**, individuals with total super balances above that threshold will pay an extra 15% tax on earnings attributable to the portion of their balance exceeding $3 million. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/non-arm-s-length-income-changes-for-superannuation-funds?utm_source=openai))
It does *not* cap super balances themselves—rather, it changes how earnings on large balances are taxed. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/non-arm-s-length-income-changes-for-superannuation-funds?utm_source=openai))
## Key Changes to Reporting & Admin
- **Funds (APRA-regulated and SMSFs)** must report additional **Division 296 tax information**. APRA funds will use bulk data exchange; SMSFs will use two new labels on the SMSF annual return. These labeling changes take effect for the **2026 financial year**. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai))
- The **Successor Fund Transfer (SFT)** protocol and **Intra-Fund Transfer** rules will be updated to support accurate reporting when accounts move or funds close. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-29-october-2024?utm_source=openai))
- Funds will have **10 business days** to respond to ATO’s requests for Div 296 information (for non-SMSFs). SMSFs use the labeled annual return. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai))
## Implications & Practical Impacts
- Funds need systems in place to compute balances accurately, particularly where there are defined benefit interests whose valuations are complex. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai))
- For individuals approaching the $3 million balance threshold, timing of earnings, contributions, and reports could influence how much Div 296 tax applies.
- Tax advisers and employers should prepare client communications explaining:
* What Div 296 means for high-balance members.
* How to anticipate tax effects in earnings above $3 million.
## Actionable Steps Before 1 July 2025
- **Review super fund balances** for clients likely to exceed $3 million and forecast earnings.
- **Assess reporting infrastructure**, especially if funds have been using older valuation methods for defined benefits.
- **Update annual return workflows**, particularly SMSF returns with new label requirements.
- **Train relevant personnel** on Div 296 concepts – valuing, reporting, tracking transfers.
## Case Example
> Samantha has a super balance of $2.8 million. During the year her fund earns 6% return. She expects the balance to increase above $3 million next year. Under Div 296, once her balance exceeds $3 million, the return on the excess portion will incur extra tax. Samantha (or her adviser) should monitor the exact timing and amount of the excess, see whether earnings can be attributed more in earlier or later periods, and ensure all required reporting is accurate.
## Best Practices & Common Pitfalls
- **Don’t wait until end of year**—identifying excess earnings early helps with forecasting tax.
- **Validate value of defined benefit interests**—they often cause complications in total super balance.
- **Ensure data consistency** across systems (fund record-keeping, member accounts, employer contributions).
- **Communicate clearly**—members above threshold will want transparency about how much extra tax they’ll pay and why.
## Conclusion
Division 296 represent a **high impact** change for high-balance superannuation members and for funds responsible for reporting and compliance. Get ready by updating systems, refining reports, and ensuring advisors can guide clients through what to expect. Early preparation will ease the transition once the measures are fully in effect from mid-2025 onward.