Tax Planning
Navigating Division 296: High Super Balance Tax and Planning Strategies
Big changes to superannuation balance tax hit from 1 July 2026. Here’s how Division 296 works and how you can plan ahead if your total super balance is above the thresholds.
By NomadicTax Research Team • 5-8 min read • May 3, 2026
## What is Division 296 and Why It Matters
Effective **from 1 July 2026**, Australia introduces additional tax on superannuation earnings for individuals with a **Total Superannuation Balance (TSB)** above set thresholds under the *Division 296 tax*. ([mcbainmccartin.com.au](https://www.mcbainmccartin.com.au/2026/04/17/april-2026-newsletter-super-reforms-pass-parliament-div-296-and-listo-changes-finalised/?utm_source=openai))
Here’s how it breaks down:
- TSB **between \$3 million and \$10 million**: an extra **15% tax** on earnings attributable to amounts above \$3 million. Effective tax on those earnings becomes **30%**. ([mcbainmccartin.com.au](https://www.mcbainmccartin.com.au/2026/04/17/april-2026-newsletter-super-reforms-pass-parliament-div-296-and-listo-changes-finalised/?utm_source=openai))
- TSB **above \$10 million**: an extra **25% tax** on earnings beyond \$10 million (for a total of **40%**). ([mcbainmccartin.com.au](https://www.mcbainmccartin.com.au/2026/04/17/april-2026-newsletter-super-reforms-pass-parliament-div-296-and-listo-changes-finalised/?utm_source=openai))
The super fund continues paying the standard 15% tax. Division 296 adds another layer through individual assessment. ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/understanding-the-new-division-296-superannuation-tax-changes?utm_source=openai))
## Key Thresholds, Timing & Liability
| Threshold | Additional Tax Rate on Earnings Above Threshold | First Measurement Date |
|---|---|---|
| \$3 million (to \$10m) | +15% | Assessment based on TSB at **30 June 2027**, for earnings in **2026-27** year ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/understanding-the-new-division-296-superannuation-tax-changes?utm_source=openai)) |
| Above \$10 million | +25% (extra 10% beyond 15%) | Same as above ([mcbainmccartin.com.au](https://www.mcbainmccartin.com.au/2026/04/17/april-2026-newsletter-super-reforms-pass-parliament-div-296-and-listo-changes-finalised/?utm_source=openai)) |
The burden of paying the tax directly is on the individual, **not** the super fund. Notices of assessment will be issued. ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/understanding-the-new-division-296-superannuation-tax-changes?utm_source=openai))
## Planning Moves to Consider
Here are actionable strategies to limit your exposure:
- **Reduce your super balance below \$3 million**: transferring out non-critical assets or withdrawing within the law (e.g., consider non-super investment options).
- **Timing contributions carefully**: avoid making large contributions that push TSB over thresholds before 30 June 2027 if you expect to exceed \$3 million.
- **Segment earnings**: use lower-risk investments inside and outside super to control where high gains accumulate.
- **Super splitting**: if married or de facto, use spouse contributions or splitting strategies, but be mindful of their respective TSBs.
- **Advance arrangements**: ensure accurate reporting by funds; maintain records since TSB will be reported annually. ([bdo.com.au](https://www.bdo.com.au/en-au/insights/superannuation/understanding-the-new-division-296-superannuation-tax-changes?utm_source=openai))
## Practical Example
Jane has a TSB of \$4 million at 30 June 2027. Earnings in 2026-27 attributable above \$3 million are \$200,000. Her additional Division 296 tax = \$200,000 × 15% = **\$30,000**. On earnings beyond \$10 million (if she had that much), applicable higher rate applies.
If Jane had reduced her TSB by \$500,000 before the measurement date, her additional tax would only apply to \$1 million of earnings above threshold, saving \$7,500.
## What to Do Now
- **Review financial position**: get updated valuations of your super balance and project growth.
- **Consult a financial adviser**: especially regarding asset movement, timing, retirement phase transitions.
- **Communicate with super funds**: ensure accurate reporting and understand fee-structures that might affect earnings.
- **Record-keeping**: keep documents relating to contribution history, valuations.
**Bottom line:** If you're close to or above the \$3 million TSB threshold, planning before 30 June 2027 is critical. These changes can have substantial tax impacts and deserve attention now, not later.