Tax Planning
How totax-plan your super when your balance exceeds $3 million under Division 296
With Division 296 now in force for high super balances, learn how to plan smarter and reduce unnecessary tax on your super earnings.
By NomadicTax Research Team • 5-8 min read • March 24, 2026
## What is Division 296?
Division 296 introduces a **15% tax** on earnings in your super that relate to the portion of your Total Superannuation Balance (TSB) **over AUD 3 million**. It applies from the **2025-26 financial year** onwards. If your TSB is under the threshold, you're unaffected. ([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-30-october-2023?utm_source=openai))
## Why this matters
Only ~0.5% of super holders will be affected, but those balancing into the tens of millions may see a meaningful tax bill. The tax is separate from income tax and is imposed directly on you. How the super fund reports, valuation of defined benefit interests, and your personal cash flow all become important. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/smsf-auditors-professional-association-stakeholder-group/smsf-auditors-professional-association-stakeholder-group-key-messages-8-july-2025?utm_source=openai))
## Tax planning strategies to consider
- **Monitor your TSB close to 30 June.** Since valuation dates are anchored there, timing contributions (or asset sales) to reduce your balance over the threshold *before* that date can help.
- **Split earnings where possible.** If you are invested across multiple super accounts, check how earnings are attributed; funds must report the portion over AUD 3M. Sometimes asset allocation or fund selection can influence taxable earnings.
- **Use carry-forward or negative earnings.** If prior years have had negative or low earnings in part of your super, this can offset future years’ earnings for Division 296.
- **Consider whether to trigger release authorities early.** It might be better to withdraw funds (where permitted) to pay the Division 296 liability rather than having the fund automatically do so, depending on timing and cash flow.
## Examples
- Jane has a single super account with AUD 4 million at 30 June. Her fund earned AUD 200,000 over the year. The portion over AUD 3M is AUD 1M, so earnings attributable to that are **(1M / 4M) × 200,000 = AUD 50,000**. The Division 296 tax is 15% × 50,000 = AUD 7,500.
- John has two super accounts: one standard, one defined benefit. The DB account’s valuation is incorporated via new valuation rules. Proper reporting and understanding how the fund values your defined benefit interest is key.
## Actionable insights
- Consult with your super fund well before 30 June to understand how they value defined benefits and earnings attribution.
- Use professional advice if your balance is near the threshold—small changes can lead to large tax consequences.
- Keep detailed records of contributions, earnings, and release authorities.
- Monitor changes in legislation or ATO guidance—there may be transitional relief or updates.
## Conclusion
Division 296 ensures high super balances contribute fairly, but with smart planning—monitoring balances, understanding valuations, and managing timing—you can reduce the burden. **Start tracking your TSB now** to avoid surprises when the next 30 June rolls around. 💡