Tax Planning
Navigating Australia’s New Division 296 Super Tax: What High-Balance Members Need to Know
If your super balance exceeds $3 million, new rules from 1 July 2026 introduce additional taxes on earnings above certain thresholds. Here's how to prepare and what changes to expect.
By NomadicTax Research Team • 5-8 min read • August 5, 2026
## What Is Division 296 and What’s Changing
From **1 July 2026**, if your *Total Super Balance* (TSB) at the end of the financial year exceeds **$3 million** (Large Super Balance Threshold, LSBT), you’ll be taxed at **15%** on the portion of your super fund’s earnings that exceed this threshold. Should your balance surpass **$10 million** (Very Large Super Balance Threshold, VLSBT), an **additional 10%** tax applies to those earnings beyond the VLSBT. ([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))
These changes don’t affect your entire super balance—only the earnings tied to the portion above each threshold. To determine your liability, ATO compares your balance both *just before the start* of the year and *at year-end* and applies the greater one for threshold assessment. ([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’s Most Likely to Be Affected
You're likely impacted if:
- You are in an APRA-regulated fund or an SMSF with balances exceeding $3 million.
- You don’t consolidate your super funds, and balances across multiple entities push you over thresholds.
- Your earnings rate in super is high—growth or investment returns play a bigger role than contributions.
Smaller balances aren’t affected, and earnings on portions below $3 million continue to be taxed under existing rules.
## Actionable Strategies Before 30 June 2026
| Strategy | Why It Matters | Steps to Take |
|---|---|---|
| **Review all super accounts** | You might be close to the thresholds due to multiple accounts | Consolidate funds where possible; ensure you know TSB at year-end |
| **Understand earnings attribution** | To assess how much of your earnings will be taxed at higher rates | Monitor high-return investments; consider diversifying for more consistent returns |
| **Evaluate timing of contributions or rollovers** | To optimise whether balances exceed thresholds at start or end of year | Delay or advance rollovers depending on projected balance movements |
| **Plan with your fund or advisor** | Funds will report earnings; getting ahead helps with tax planning | Seek estimates, model outcomes under different scenarios |
## Examples
- *Emily* has a single SMSF with a balance that starts the year at $2.9 million and ends at $3.2 million. She’ll be taxed 15% on earnings only over $3 million.
- *Raj*, with a $10.5 million balance, pays 15% on earnings over $3 million, *plus* an extra 10% on earnings above $10 million.
## What Employers, Funds, and SMSFs Need to Do
- **Super funds** must report relevant super earnings to ATO to support assessments. SMSFs must assess if TSB exceeds LSBT. ([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))
- **Individuals** should track balances across all super accounts.
- **Tax advisors** need updated modelling tools and client advice reflecting the Division 296 tax liability.
## Bigger Picture: Why This Matters
- Aims to **target larger super balances**, balancing fairness in the tax system.
- Reflects pressure to return “bracket creep” via cuts elsewhere while ensuring those with significant wealth contribute more.
- Indexing of thresholds in future years expected, meaning adjustments needed over time. ([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))
**Bottom line**: If you're expecting your super balance to exceed $3 million at year-end, this is your cue to plan ahead—both to understand your potential tax liability and to explore structural moves that may help you manage exposure.