Compliance
Navigating Division 296: Superannuation Tax for Balances Over $3 Million
From 1 July 2026, super balances above $3 million will see additional tax on earnings—but only on the amounts exceeding key thresholds. Here’s how to prepare.
By NomadicTax Research Team • 5-8 min read • July 26, 2026
## What is Division 296 and Why It Matters
The Government has introduced a **new superannuation tax**, known as *Division 296*, applying from **1 July 2026**. Individuals whose **Total Superannuation Balance (TSB)** exceeds the *Large Super Balance Threshold (LSBT)* of **AUD 3 million** will face extra tax on super earnings above that amount.([csc.gov.au](https://www.csc.gov.au/News-and-insights/2026/March-5-Division-296-tax?utm_source=openai)) For those with TSB above the *Very Large Super Balance Threshold (VLSBT)* of **AUD 10 million**, an additional layer of tax applies.([csc.gov.au](https://www.csc.gov.au/News-and-insights/2026/March-5-Division-296-tax?utm_source=openai))
## How the Taxes Apply
| Balance Range | Additional Tax on Earnings | Total Tax on Those Earnings |
|---------------|-----------------------------|------------------------------|
| Up to AUD 3 M | 0% | 15% (standard accumulation phase rate) |
| Between AUD 3 M & AUD 10 M | +15% | 30% |
| Above AUD 10 M | +15% & +10% | 40% |
| Retirement Phase Up to AUD 3 M | 0% | 0% |
| Retirement Phase AUD 3 M–AUD 10 M | +15% | 15% |
| Retirement Phase Above AUD 10 M | +25% | 25% |
([csc.gov.au](https://www.csc.gov.au/News-and-insights/2026/March-5-Division-296-tax?utm_source=openai))
Earnings are defined under a framework that reflects realised gains, changes in asset values, account transactions, and other movements. Super funds will report relevant earnings to the ATO. Assessments are expected in **latter half of 2027–28** once reporting is complete.([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 Impacted
- Individuals with large super balances (public servants, high-income earners, fund managers) across APRA-regulated funds and SMSFs.([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))
- Only earnings above the thresholds are taxed extra; the base balance retains existing 15% rate in accumulation, or 0–15% depending on retirement phase.([csc.gov.au](https://www.csc.gov.au/News-and-insights/2026/March-5-Division-296-tax?utm_source=openai))
- Reporting comes via your super fund. If you’re near or above the thresholds, ensure your super funds (and SMSFs) have accurate valuation processes. Transparency will matter.([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 Strategies Before 1 July 2026
1. **Review Super Investments**: Assets that appreciate quickly may push earnings above thresholds—consider investments that generate fewer gains until after changes take effect.
2. **Aggregate Super Across Funds**: Your TSB includes all super funds—multiple SMSFs, public, and private. Consolidating can simplify tracking.
3. **Speak to Your Fund or Adviser**: Ensure super funds understand valuation methods. SMSFs should be prepared to report and value properly. Anticipate impending notices.
## Long-Term Implications
This policy signals a shift toward limiting tax advantages for high super balances. It rewards moderation and earlier retirement planning, but requires high-balancers to adjust how they think about accumulating super. Planning, valuation and future growth forecasts will become increasingly important.
**Actionable Steps**:
- Estimate your TSB as of 30 June 2026; forecast growth to test likelihood of exceeding AUD 3 million.
- If close, evaluate paying down debt, withdrawing, or moving assets—not prematurely, but mindfully.
- Stay current with fund reporting dates, especially for APRA funds and SMSFs.
- Factor Division 296 into retirement planning projections—from income needs to estate plans.
Division 296 reshapes fairness in super taxation. For those affected, early awareness and aligned strategy will matter more than ever.