Tax Planning
How Division 296 Impacts High-Balance Super Members
From 1 July 2026, superannuation balances above $3 million may incur additional tax under Division 296 — members need to understand how earnings above thresholds are taxed, and when assessments will occur.
By NomadicTax Research Team • 5-8 min read • August 10, 2026
## What is Division 296?
Division 296 is a new tax rule that takes effect **from 1 July 2026**, targeting superannuation members with **Total Super Balances (TSBs)** above certain thresholds. If your balance exceeds these, you may face **additional taxes** on earnings over the thresholds. ([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 and Rates (2026-27 Financial Year)
| Threshold | Tax on Earnings Above Threshold |
|---|---|
| **Large Super Balance Threshold (LSBT)** – $3,000,000 | 15% tax on earnings above LSBT ([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)) |
| **Very Large Super Balance Threshold (VLSBT)** – $10,000,000 | Additional 10% tax on earnings above VLSBT (i.e. 25% total) ([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)) |
Only the **earnings portion** of your super linked to the balance above the threshold is taxed at these higher rates, not the full balance.
## Who Will Be Affected?
- Members of **SMSFs** or APRA-regulated funds whose total super across funds exceeds **$3 million** at financial year end.
- Members with balances under that will not be impacted.
## Reporting & Notice of Assessments
- Super funds must **report relevant super earnings** to the ATO for members over LSBT or VLSBT. ([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))
- The ATO will issue **Division 296 tax notices** for the 2026-27 financial year in **the latter half of 2027-28**, once earnings have been 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))
## Examples to Illustrate
- **Example A**: Rachel has a total super balance of $4 million at 30 June 2027. If her fund earns $200,000 in earnings that year, only the portion tied to $1 million above the $3 million threshold is subject to 15% tax.
- **Example B**: David has a $12 million super balance. For earnings linked to $7 million above the $3 million LSBT, earnings taxed at 15%; for earnings tied to $2 million above the $10 million VLSBT, that portion faces an additional 10% (i.e. 25% total on that part of earnings).
## Planning and Practical Moves
- **Projection of balance thresholds**: Estimate your balance at year-end to determine if you’ll cross LSBT or VLSBT.
- **Consider earnings timing**: If possible and practical, shift where earnings are realised or try to hold/ defer high-earning years to manage exposure.
- **Review fund choice**: Combining or separating accounts strategically might affect total super balance calculations.
## Compliance Risks & Considerations
- If earnings are **not reported** correctly or late, you might miss out on notifications or pay more than necessary.
- There may be indexation in future years — LSBT and VLSBT may not stay fixed. Stay alert to announcements.
## Conclusion
If your super balance is approaching $3 million, you should become familiar with Division 296 and its implications for taxation of your super earnings from 1 July 2026. With the burden of reporting and assessment lagging into later years, proactive planning offers clearer control and potentially lowers tax exposure.