Tax Planning

Maximizing Super Savings Before Division 296 Hits on 1 July 2026

If your superannuation balance is approaching or exceeding $3 million, the Division 296 reforms will significantly affect you — here’s what you need to know and what you can do now.

By NomadicTax Research Team • 5-8 min read • June 30, 2026

## What is Division 296 — the Better Targeted Superannuation Concessions Tax? Australia’s Federal Parliament passed the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Act 2025, which introduces **Division 296**, effective **1 July 2026**. Individuals with total superannuation balances (TSBs) over **$3 million** will pay an **additional 15% tax on realised earnings** attributable to the portion of their balance above that threshold. Those with balances over **$10 million** face an extra 10% on earnings above $10 million (bringing the total rate to 25–40% for that portion). ([trinitygroup.com.au](https://trinitygroup.com.au/post/superannuation-changes-2026/?utm_source=openai)) ## Key Changes and Practical Impacts - The new tax applies **only to realised earnings** — market value increases that haven’t been sold are exempt. ([egu.au](https://www.egu.au/insights/2026/4/14/division-296-the-new-tax-on-large-superannuation-balances-takes-effect-1-july-2026?utm_source=openai)) - The thresholds ($3 million and $10 million) will be **indexed to CPI**, meaning inflation may gradually raise them. ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/understanding-the-new-division-296-superannuation-tax-changes?utm_source=openai)) - First test date: **30 June 2027**; first assessments expected soon after that. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/GDPupliftfactor?utm_source=openai)) ## What You Should Do Now — Strategies Before 1 July ### Review and Measure Your TSB - Calculate your total superannuation balance across all super funds as of 30 June 2026. If it’s **just under $3 million**, you'll want to know. - For many, especially Self Managed Super Funds (SMSFs) with big assets, crossing the threshold triggers major consequences. Be cautious with growth from illiquid assets. ### Consider Liquidity and Realised Gains - Because the tax only hits realised earnings, delays or deferrals on realising gains (e.g., from property, shares) might help — but be wary of market risks. - If you have realisable capital gains, you may be able to reset cost bases or defer sales until after the 2026-27 year to reduce liability. ### Explore Spouse Transfers and Structuring Options - Splitting assets or contributions with a lower balance spouse can sometimes reduce exposure. - Assess rolling over or changing how pension-phase assets are held — earnings in pension phase are generally taxed differently. ### Adjust Contribution Behaviour - With non-concessional contribution caps increasing (see below), you may have room to make after-tax contributions in more tax-efficient ways. - Ensure you’re not over-contributing accidentally, as the tax liability under Division 296 may leave you locked into unexpected assessments. ## Related Super Changes to Know - **Contribution caps increases** from 1 July 2026: concessional cap $30,000 → $32,500; non-concessional cap $120,000 → $130,000. ([superfind.com.au](https://superfind.com.au/updates/budget-2026-super-changes/?utm_source=openai)) - **Transfer Balance Cap increase** from $2.0 million to $2.1 million. ([superfind.com.au](https://superfind.com.au/updates/budget-2026-super-changes/?utm_source=openai)) - **Payday Super** reform requires super guarantee (SG) contributions to be paid at the same time as wages (within 7 business days) instead of quarterly. Effective 1 July 2026. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/PaydaySuper?utm_source=openai)) ## Example Scenario > **Sarah**, aged 62, has a TSB of $4 million as of 30 June 2026. Over the year, her super earned $200,000 in realised earnings. Under Division 296, the earnings attributable to the portion over $3 million is $1 million (since $4M − $3M = $1M), which is 25% of the total $200,000 earnings for the year. She’ll pay an additional 15% on that $50,000 — i.e., an extra $7,500 in tax. Earnings on first $3M remain taxed at current rate inside benefits rules. ## Summary Division 296 represents one of the most significant superannuation reforms in recent history, especially for high-balance holders. If you’re pointing toward or over $3 million, now is the time to plan. Seek personalised financial advice, model different growth and tax scenarios, and revisit your contribution and asset realisation strategies before 30 June 2026.