Tax Planning
Navigating Australia’s New Super Tax: What High-Balance Super Holders Need to Know (Division 296)
From 1 July 2026, Australians with total super balances (TSB) over $3 million will face a new tax on earnings—a major shift for those with large balances. Here’s a clear guide to what’s changed and how to plan ahead.
By NomadicTax Research Team • 5-8 min read • July 14, 2026
## What is Division 296 tax?
Australia’s Parliament passed the **Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026**, which introduces **Division 296** into the Income Tax Assessment Act 1997. It takes effect from **1 July 2026**, applying **additional tax on super earnings for individuals** whose **total super balance exceeds $3 million**. ([aph.gov.au](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2526/26bd048?utm_source=openai))
## How rates stack up
- TSB **up to $3 million**: no change—standard super earnings tax remains.
- TSB **between $3 million and $10 million**: earnings attributable to this portion will incur an **extra 15% tax**, making the combined tax **30%** on those earnings. ([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))
- TSB **above $10 million**: earnings over that threshold incur **another 10% on top**, resulting in a **40% rate** on that portion. ([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))
## Key features and planning windows
- **Only realised earnings** are taxed—**unrealised capital gains** (paper gains) are excluded. ([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))
- Thresholds ($3m and $10m) will be **indexed to CPI** to prevent bracket creep. ([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))
- **Assessment notices** will be issued in **late 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))
## Who is likely impacted?
- High-net-worth individuals, self-managed superannuation fund (SMSF) members, business owners who have significantly grown their super assets.
- Example: You hold **$4 million** across super accounts, with **$1 million** exceeding the $3 million threshold. Earnings on that $1 million will first be taxed at existing fund rate (15%), then additional 15%, totalling 30%. ([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))
## Actionable strategies before 1 July 2026
- **Evaluate realised vs unrealised gains**: Where possible, consider disposing of assets or rebalancing your portfolio before earnings accumulate under the new thresholds.
- **Use cost base reset elections** available for super funds as at 30 June 2026, to reduce exposure from historical gains. ([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))
- **Compare keeping super vs withdrawing or restructuring**: For balance portions over $3 million, determine whether retaining inside super—with higher tax but still potentially lower than personal income tax—is optimal based on your marginal rate.
- **Seek professional advice**: Advice is crucial around realising assets, structuring super investment, and coordinating with retirement and estate planning.
## Long-term implications
- Super will remain attractive for many, but the **tax advantages for large balances are eroded**. Social contributions to inequality debates likely assured.
- Monitoring of one's total super balance across all accounts becomes essential.
- Contributions, withdrawals, and fund structuring must be coordinated with new rules.
**Summary**: If your total super balance is heading past the $3 million mark, now’s the time to plan. With the first Division 296 tax assessments expected in 2027–28, review your holdings, realise gains strategically, and consult a financial adviser to minimize your tax exposure under the new rules.