Tax Planning

How superannuation reform & Division 296 tax will impact high-balance members

With Division 296 coming into effect 1 July 2026, superannuants with balances over $3 million need to understand new tax on earnings and transitional rules to avoid surprises.

By NomadicTax Research Team • 6 min read • May 1, 2026

## What is the Division 296 tax? From **1 July 2026**, Australia introduces a **new tax regime (Division 296)** targeting individuals with superannuation balances exceeding $3 million. The reform reduces tax concessions on super earnings by attributing a portion of a fund’s investment income to high-balance members. This aims to rebalance fairness across the superannuation system. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai)) ## Key features & how it works - For **SMSFs (Self-Managed Super Funds)**, attribution of earnings is based on each member’s **proportion of the fund’s average total balance**, often requiring an **actuary’s certificate** unless the fund has only one member or no one exceeds the $3 million threshold. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai)) - For APRA-regulated funds and **Pooled Superannuation Trusts (PSTs)**, earnings attribution depends on factors including the member’s balance, investment choices, period held and transitional adjustments especially for net capital gains. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai)) - Draft regulations also specify how defined benefit interests are handled, which categories are excluded, and what happens in death years. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai)) ## Transitional arrangements & timeline - The legislation for Division 296 passed **both Houses of Parliament** and received **Royal Assent on 13 March 2026**. ([macquarie.com.au](https://www.macquarie.com.au/advisers/insights/monthly-technical-roundup/april-2026.html?utm_source=openai)) - From **1 July 2026**, the new rules take effect for **2026-27 income year**. For example, SMSF balances above $3 million will now be taxed differently. ([macquarie.com.au](https://www.macquarie.com.au/advisers/insights/monthly-technical-roundup/april-2026.html?utm_source=openai)) - Transitional rules apply to net capital gains for non-small funds over the first four transitional years. ([macquarie.com.au](https://www.macquarie.com.au/advisers/insights/monthly-technical-roundup/april-2026.html?utm_source=openai)) ## Implications for members with high balances - **Increased tax burden**: Earnings formerly taxed concessionally may now face higher effective taxation. If you are in this group, estimate your post-tax super returns under the new rules. - **Need for precise record-keeping**: Actuary certificates, average balance calculations, investment option allocations—all become central. Errors or missing documentation could lead to incorrect tax treatment. - **Consider structural changes**: If feasible, reviewing fund structure (e.g. transferring money across accounts or funds, timing of asset sales) might mitigate taxable earnings attribution. ## Actionable advice to prepare 1. **Audit your super funds’ balances** now—see if you are close to or above the $3 million threshold. 2. **Engage an actuary early** if you are in an SMSF, to estimate your likely earnings attribution and understand requirements. 3. **Review investment asset mix**, particularly asset classes generating net capital gains—these are heavily weighted in the calculation. Consider timing of disposals. 4. **Talk to your fund**—APRA funds may offer guidance or options to shift investment strategies. 5. **Plan for cashflow**—any additional tax liability starting 2026-27 may affect disposable income or super contributions. ## Example scenario > Sarah, aged 58, has an SMSF with total members’ balances of **$5 million**, her personal share is **$3.5 million**. Under Division 296, from 1 July 2026, part of the SMSF earnings—including capital gains—must be attributed to her balance and taxed at a higher rate than before. She engages an actuarial estimate and shifts some growth assets to low-gain assets to reduce net capital gain exposure. --- **Summary**: If you have a large super balance, these reforms mean **less generous tax advantages**, especially on growth and capital gains. Start planning now—review your mix, get actuarial help, track balances and document everything.