Tax Planning
Maximising Super Savings Amid New Division 296 Rules
The introduction of Division 296 ushered in new taxation on super balances above A$3 million—this article explains what this means and how to plan ahead.
By NomadicTax Research Team • 5-8 min read • April 17, 2026
## Understanding Division 296 and Your Superannuation
From **1 July 2025**, the Better Targeted Superannuation Concessions (BTSC) change known as **Division 296 Tax** becomes effective. Individuals whose **Total Superannuation Balance (TSB)** exceeds **A$3 million** at the end of an income year will face a **15% tax** on earnings attributed to the portion of the balance over that threshold. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai)) This measure does *not* limit super balance growth but adjusts the tax concessions applicable to large super balances. ([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))
### Key Dates & Obligations
- **Start date**: Affects 2025-26 income year balances. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
- **Reporting and assessment**: Funds must report additional label information via SMSF Annual Returns or bulk data for non-SMSFs. Notices of Assessment (NOA) will be issued to individuals whose TSB exceeds the threshold. ([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-17-june-2025?utm_source=openai))
- **Payment options**: Individuals can pay directly or elect to release excess from super funds within 60 days of NOA. If payment isn't made, the ATO may issue a release authority to the fund. ([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))
## Planning Strategies & Example
If your current super balance is approaching or exceeding A$3 million, here are actionable strategies:
- **Review super fund performance**: Since even *earnings* over the threshold are taxed under Division 296, investments with lower volatility or growth may help reduce the taxable excess.
- **Timing contributions**: Contributions before 1 July 2025 won’t retroactively trigger Division 296, but only balances *at end of financial years* matter.
- **Personal tax planning**: Use other reliefs (e.g., negative super earnings carried forward) to offset earnings.
- **Consider early retirement drawdowns** if eligible: For instance, drawing from defined benefit interests may defer or reduce exposures. Detailed rules apply. ([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))
### Example Scenario
Jane, age 60, has a Total Super Balance of A$3.5 million at 30 June 2026. Her super fund earns A$100,000 in investment income in 2026-27. Under Division 296, the **A$500,000 excess** (3.5 m − 3 m) attracts 15% tax on the portion of earnings attributable to that A$500,000. So she pays tax on (A$100,000 × (500,000 ÷ 3,500,000)) = **A$14,285 at 15%**, equal to **A$2,142.75**.
## Actionable Insights Now
- Check your current super balance and projections for 30 June 2025 and 2026.
- Consult with your super fund about reporting capacity and label changes. Actual values will matter.
- Evaluate whether contribution strategies or investment adjustments align with upcoming Division 296 liabilities.
With **Division 296**, large-balance superannuation is no longer tax-concession free for excess earnings. Planning early gives you options to manage those liabilities.