Tax Planning
Navigating the New Division 296 Tax: What High-Balance Superannuation Members Need to Know
If your super balance exceeds $3 million (or even $10 million), a new tax regime under Division 296 kicks in from 1 July 2026—this article breaks down how it works and how you can plan ahead.
By NomadicTax Research Team • 5-8 min read • August 14, 2026
## What is Division 296 Tax?
From **1 July 2026**, an additional tax applies to super earnings for individuals whose Total Super Balance (TSB) exceeds certain thresholds. Here's how it works:
- If your TSB is over **$3 million** at the end of a financial year, earnings on the portion above $3 million will be taxed at **15%**.
- If your TSB is over **$10 million** (the Very Large Super Balance Threshold), you'll pay an **additional 10%** on earnings above that.
These earnings are not your entire super balance—only the portion that exceeds the threshold attracts the extra 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's Impacted?
- Individuals with **mid to high super balances**, especially those close to or exceeding the $3 million threshold.
- SMSF members, high earners, or those with large concessional contributions.
## Example
Sarah has a super fund with a TSB of **$5 million** at 30 June 2027. Of that, $2 million are earnings over the $3 million threshold. If those $2 million of earnings grew by $200,000 in that year, **$200,000** will be taxed **15%**, leading to **$30,000** in extra tax. If part of that sum pushes past $10 million, the portion above that incur an additional 10% 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))
## How to Plan Ahead: Actionable Strategies
- **Monitor your TSB:** Track your balance throughout the year to know whether you'll cross thresholds.
- **Manage contributions carefully:** Timing of contributions can affect your year-end balance. Spreading out contributions or adjusting them may help.
- **Review investment returns:** Lower-risk assets may yield lower earnings but reduce tax exposure.
- **Tax offsets & deductions:** Explore whether any super fund fees, earnings, or transition-to-retirement income streams offer offsets or relief.
- **Get professional advice:** Especially if you are close to or over thresholds, a financial adviser or tax professional can model outcomes.
## Practical Tips for Different Types of Taxpayers
| Situation | Tip |
|---|---|
| SMSF members with $2.5m to $3.5m balances | Defer or moderate non-urgent contributions until after the balance dips below thresholds, or split contributions over financial years if possible. |
| Retirees | Consider whether preserving capital rather than maximising growth may reduce tax on earnings. |
| Young high-earning professionals | Use salary sacrifice, and review investment mix, but also account for potential future Division 296 exposure. |
## Conclusion
Division 296 introduces extra taxation for earnings on super balances above $3 million (and heavier tax past $10 million). Knowing how and when it applies empowers you to structure your super contributions, investments, and overall tax-planning more effectively. Stay ahead of these changes to avoid surprises once assessments begin in 2027-28.
**Tax Home:** Australia
**Category:** Tax Planning
**Author:** NomadicTax Research Team
**Read Time:** 6 min