Tax Planning
Mastering Division 296: Super Balance Tax Changes from 1 July 2026
From 1 July 2026, taxpayers with total super balances over $3 million will face higher taxes on super earnings above thresholds—as high as 25% for earnings over $10 million.
By NomadicTax Research Team • 5-8 min read • August 15, 2026
## What is Division 296 tax?
Division 296 is a new tax measure applying from the **2026-27 financial year**. It imposes additional tax on **superannuation earnings** for individuals whose **Total Super Balance (TSB)** exceeds certain 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))
- For TSB over **$3 million** (the Large Super Balance Threshold, LSBT), earnings above that threshold will be taxed at **15%**. ([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))
- For TSB over **$10 million** (the Very Large Super Balance Threshold, VLSBT), earnings above the VLSBT are taxed at an **extra 10%**, meaning **25%** tax on that portion. ([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 this affects and when assessments begin
- Individuals with super balances nearing or exceeding $3 million should review current and projected balances. All super accounts across APRA regulated funds or self-managed funds (SMSFs) count toward your TSB. ([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))
- Super funds will report relevant earnings; assessments for 2026-27 will be issued in the **latter half of 2027-28** once reporting is complete. ([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))
## Practical considerations and tax planning strategies
- **Project your super earnings and balances** early. If you are likely to exceed LSBT or VLSBT, consider strategies to minimise earnings over thresholds, such as:
- Delaying certain earnings or reallocating investments toward lower-earning assets within super
- Splitting super across funds or applying tax-effective investment strategies to reduce attributable earnings above thresholds
- Using pension phase or transition to retirement strategies carefully, as these phases might produce earnings that count toward Division 296 tax.
- **Monitor your fund’s reporting**. SMSF trustees should ensure accounting systems can break out earnings over threshold. APRA-funds likely will handle this, but double-check fund notices.
- **Understand implications for estate planning**. Large super balances are now more closely scrutinised; the tax in death and binding nominations will need review if beneficiaries ultimately receive earnings taxed under Division 296.
## Example scenario
Suppose Jane has a TSB of **$4 million** at the end of 2026-27. Her fund earns **$200,000** for the year on this excess balance ($1 million over LSBT). Under Division 296, **15%** tax applies only to earnings linked to the excess above $3 million. If $200,000 is entirely linked, Jane pays **$30,000** additional tax on that portion; her earnings under $3 million continue to receive regular treatment. If her TSB were $12 million, earnings above $10 million would incur extra tax—i.e. earnings linked to the $2 million excess taxed at 25%.
## Action steps for financial year 2026-27
1. Review and estimate your total super balance as at **30 June 2026** and projections for 2027.
2. Speak with your super fund about recent reports and how earnings allocations will be calculated and reported.
3. Plan asset allocation within super to manage earnings volatility around LSBT and VLSBT thresholds.
4. Consider whether tax or financial advice is necessary, especially if nearing or crossing thresholds.
With these changes, Division 296 ensures those with very large super balances contribute more tax on earnings beyond thresholds—so proactive planning is the key to minimising surprises.