Tax Planning
How Division 296 Will Impact High-Balance Super Holders and What You Can Do About It
Australia’s new Division 296 tax introduces extra levies on super balances over $3 million and $10 million—now's the time to understand thresholds, planning windows, and actionable strategies.
By NomadicTax Research Team • 5-8 min read • May 1, 2026
## What is Division 296?
From **1 July 2026**, Australia will enforce the **Division 296 tax** under the *Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026*. Individuals with **Total Superannuation Balances (TSB)** **above $3 million** will incur an **additional 15% tax on realised earnings** for the portion of balance that exceeds this threshold. A **second threshold at $10 million** carries a further 10%, meaning those excess earnings are taxed at **effectively 40%**. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))
Importantly, the tax applies only to **realised earnings**—dividends, interest, rent and gains from assets that have been sold—not to unrealised or “paper” gains. ([fordhamgroup.com.au](https://www.fordhamgroup.com.au/industry-expertise/division-296-super-tax/?utm_source=openai))
The first assessments will be based on balances and earnings for the **2026-27 financial year (ending 30 June 2027)**. ([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/latest-update-on-division-296-tax-as-we-begin-2026/?utm_source=openai))
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## Thresholds and Indexation
| Threshold | Effective Portion | Tax Rate on That Portion |
|-----------|---------------------|---------------------------|
| Over $3 million up to $10 million | Earnings attributable above $3 million | **+15% extra** (on top of the base 15%) = **30% total** ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))|
| Over $10 million | Earnings attributable above $10 million | **+25% extra** = **40% total** ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))|
Both thresholds will be indexed to inflation: the $3 million in **$150,000 increments** and $10 million in **$500,000 increments**. ([fordhamgroup.com.au](https://www.fordhamgroup.com.au/industry-expertise/division-296-super-tax/?utm_source=openai))
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## Who Is Affected & Key Dates
- If your **TSB as at 30 June 2027** exceeds $3 million or $10 million, you may face Division 296 tax. ([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/latest-update-on-division-296-tax-as-we-begin-2026/?utm_source=openai))
- The tax is calculated based on each fund’s realised earnings, proportionally allocated across your superannuation interests. ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/division-296-tax-changes-what-you-need-to-know?utm_source=openai))
- Even pension-phase super counts toward the TSB for these purposes. ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/division-296-tax-changes-what-you-need-to-know?utm_source=openai))
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## Planning Strategies Before the First Assessment
1. **Review your super balance now** — check your combined TSB across all funds and compare to $3 million and $10 million thresholds.
2. **Consider cost-base resets for concessional funds**, especially for **SMSFs and small APRA funds**, which may opt-in to reset the base of CGT assets at market value as of 30 June 2026. ([fordhamgroup.com.au](https://www.fordhamgroup.com.au/industry-expertise/division-296-super-tax/?utm_source=openai))
3. **Evaluate asset sales** — since only realised gains trigger the tax, holding illiquid assets or delaying sales may defer liability.
4. **Forecast contributions and withdrawals**, considering whether withdrawing before 30 June 2027 could reduce your TSB under threshold (but be cautious of impacts and revisions). ([grantthornton.com.au](https://www.grantthornton.com.au/insights/client-alerts/latest-update-on-division-296-tax-as-we-begin-2026/?utm_source=openai))
5. **Stay aware of reporting changes** — SMSFs will report via new labels in the annual return from 2026-27; individuals will receive Notice of Assessment (NOA) 84 days after the ATO issues it. ([australia.acclime.com](https://australia.acclime.com/news/division-296-superannuation-changes/?utm_source=openai))
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## Pitfalls to Avoid
- Acting before legislation is fully in force: details could change.
- Withdrawing funds without considering other tax or concessional implications.
- Relying on asset valuations that are out-of-date or illiquid without proper documentation.
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## Example
**Sarah** has an SMSF with a **$4 million balance** on 30 June 2026, and in FY 2026-27 it earns **$200,000 realised earnings**. Portion above $3 million is **$1 million / $4 million = 25%** of the earnings attributable. So Sarah’s Division 296 tax: $200,000 × 25% × 15% = **$7,500**. Total effective tax on that portion becomes **30%**, so full earnings taxed accordingly.
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## Action Plan
- Organise a super review with your financial adviser now.
- Ensure all fund statements, valuations and cost bases are well documented before 30 June 2026.
- Consider whether fund structures or fund types could alter exposures.
- Use the coming months to minimise exposure, not panic.
Division 296 alters rules for high-wealth super holders; being an informed, proactive superannuation member will make a big difference.