Tax Planning
Managing Super Wealth: Understanding Division 296 Tax on Large Super Balances
For Australians with super balances above $3 million (and especially over $10 million), new tax on earnings above those thresholds kicks in from 1 July 2026—here’s how to plan and mitigate.
By NomadicTax Research Team • 5-8 min read • July 29, 2026
## What is Division 296 tax?
From **1 July 2026**, super funds must report earnings for members whose **Total Super Balance (TSB)** exceeds the **Large Super Balance Threshold (LSBT)** of $3 million. Earnings over this threshold will face an additional **15% tax**. If you have more than $10 million in super (Very Large Super Balance Threshold, VLSBT), an **extra 10% tax** applies on earnings over $10 million. Only earnings over the thresholds are taxed — **not the entire super**. ([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))
## Who is affected and when assessments begin
- Members of both SMSFs and APRA-regulated super funds with **TSB over thresholds** at the start or end of the year.
- Assessments for the 2026-27 financial year will be issued in the **latter half of 2027-28**, after earnings are 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))
## Strategies to manage impact
- Monitor your super balances throughout the year. Since the law uses the greater of end-year or pre-start-of-year balances, planning contributions timing could shift exposure.
- Consider limiting non-concessional contributions that push you over thresholds unless tax benefits outweigh the extra rate on earnings.
- Seek opportunities for concessional contributions or salary sacrifice to reduce taxable earnings if over thresholds.
- Review investment strategy inside your super to balance earnings vs potential tax when over threshold.
## Example
Alice has a TSB of **$3.5 million** at end of June 2027. Her earnings inside the super fund for that year are $200,000. Only earnings **linked to the $500,000 over the LSBT** are taxed at 15% — that is, ($500,000 ÷ $3,500,000) × $200,000 = tax-relevant earnings portion. If Alice also had amounts over $10 million, extra tax applies on those excess earnings.
## Practical steps now
- Request periodic balance statements from your super fund to track threshold exposure.
- If close to thresholds, avoid large contributions or restructure contributions across years.
- Engage a financial adviser fluent in super taxation to help with decision making—especially for high net worth individuals.
- Keep detailed records of contributions, earnings, and when funds changed hands or were rolled into different funds.
With Division 296, high balance funds face new taxation on earnings above thresholds from 1 July 2026. Strategic income timing, contribution planning, and investment asset allocation can help manage exposure and preserve more of your retirement balance.