Compliance
Navigating Division 296: New Super Tax for High Super Balances
From 1 July 2026, individuals with super balances over AU$3 million face new taxation rules—learn how Division 296 works and what you can do to manage its impact.
By NomadicTax Research Team • 6-7 min read • July 7, 2026
## What is Division 296?
Division 296 is a newly introduced superannuation tax effective from **1 July 2026**, which may apply if your **Total Super Balance (TSB)** exceeds **AU$3 million** at the end of a financial year. ([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))
- If your TSB is above **$3 million but less than $10 million**, you pay **15% tax** on super earnings attributable to the portion of your balance above $3 million. ([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))
- For balances above **$10 million**, there is an **additional 10% tax** (so earnings on the excess over $10 million will incur **25% total tax**). ([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 Affected and When?
- Applies to **TR 2026-27** for assessment; however, the first year to which this tax applies is the **2025-26** financial year. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-1ef514f7-8f71-4ac2-889f-6fb8d0600df6?utm_source=openai))
- Notice of Assessment will come in **latter half of 2027-28** once earnings are reported by the super fund. ([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))
## Practical Impacts & Examples
- **Alex** has a super balance of **$4 million**. The **$1 million** over the threshold will have its earnings taxed at 15%. If that excess earns $50,000, **$7,500** tax becomes due.
- **Beth**, with a **$12 million** TSB, will pay 15% on the portion between $3–10 million, and 25% on any earnings above $10 million. Earnings above $10 million thus attract this higher rate.
## Mitigation Strategies
- Monitor your super balance as year-end approaches. If you expect to exceed thresholds, consider:
* Timing withdrawals, where possible and permitted;
* Assessing investment options to possibly reduce earnings in high-earning segments of your fund;
* Discussing with your super fund whether defined benefit interests or accumulation interests affect timing of debt liability. The tax on defined benefit interest earnings may be **deferred** until pension or benefit payments begin. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-1ef514f7-8f71-4ac2-889f-6fb8d0600df6?utm_source=openai))
## Compliance and Reporting Requirements
- Super funds (both APRA-regulated and SMSFs) **must report relevant earnings** exceeding the LSBT (large super balance threshold) via new labels in the SMSF Annual Return. ([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 will receive a **Notice of Assessment (NOA)**, due **84 days after** its issue. They can elect to pay directly or apply for a release of funds within 60 days. If not paid, Commissioner can issue release authority to super funds. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/sites/default/files/2026-02/PLS_working_group_key_outcomes_20_January_2026.pdf?utm_source=openai))
## Key Takeaways
- Division 296 won’t slash your entire super & tax approach, only the **earnings above the thresholds**.
- The tax is **individual-based**, separate from fund level tax.
- High super balances need proactive management—start planning now to minimize surprises when assessments are issued.