Compliance
Navigating the Superannuation Tax Changes & Division 296 Threshold: What High-Balance Accounts Must Know
Starting 1 July 2026, superfunds with balances above $3 million face new taxes on earnings above thresholds, while low income earners receive enhanced offsets – here's how to stay compliant and optimise your super.
By NomadicTax Research Team • 5-8 min read • July 26, 2026
## Overview of New Superannuation Measures
Australia’s “Building a Stronger and Fairer Super System” Bill 2026 introduces key changes applicable from 1 July 2026 and 1 July 2027:
- **Division 296 tax**: Individuals with **Total Superannuation Balances (TSB)** over **$3 million** are taxed **15 %** on only super earnings above that threshold. For those whose TSB exceeds **$10 million**, there’s an additional **10 % tax** on earnings above the $10 million Very Large Super Balance Threshold (VLSBT).([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))
- **Low Income Superannuation Tax Offset (LISTO)** enhanced: Threshold raised from **$37,000 to $45,000** in income, and maximum LISTO payment increased from **$500 to $810**, effective from 1 July 2027.([aph.gov.au](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2526/26bd048?utm_source=openai))
## Impacts & Compliance Considerations
- **High-balance accounts will see reduced concessional advantage**: Super fund holders over $3 million will see higher immediate taxation on earnings above the threshold, which may affect long-term compounding.
- **Earnings attribution vs balance snapshot**: Tax is based on earnings over the threshold, not the entire super balance. Correctly tracking the TSB at end of financial years is crucial.
- **LISTO enhancements help low earners**: Beneficiaries with income up to $45,000 will receive more super tax benefit from July 2027, helping reduce cost of retirement saving.
## Practical Strategies for Super Accounts
1. **Monitor super balance carefully**: Project your growth trajectory; if likely to exceed thresholds, consider timing contributions or pension conversions before threshold effects materialize.
2. **Consider split-balance strategies**: Using spouse contributions or non-concessional strategies to even out balance or reduce taxable earnings.
3. **Evaluate product structures**: Some super fund investment options may generate high earnings volatility — choosing more stable earnings or diversified portfolios may reduce exposure to the Division 296 tax.
4. **Ensure you receive LISTO benefits**: Low income earners should keep records and check entitlements post law change; adjust withholding if needed.
## Example Cases
- **Carol**, whose super account balance is $3.5 million at 30 June 2026. Earnings above the $3 million threshold will be taxed at 15 %. If at 30 June 2027 her balance hits $10.5 million, earnings above $10 million will incur an extra 10 %.
- **David**, earning $42,000 per year. Under new LISTO settings from 1 July 2027, he’s eligible for more offset, increasing his tax-effectively lower super tax rate, and boosting retirement savings.
## Steps to Stay Ahead
- Review your super fund’s earnings reports to gauge exposure.
- Plan large voluntary contributions before balance exceeds threshold if feasible.
- For fund managers, ensure systems are ready to apply new thresholds and tax rates from 1 July 2026 and 2027.
- Low income earners should check with their ATO digital services and tax agents to claim the enhanced LISTO.
## Compliance Reminders
- Accurate record-keeping of super balances at financial-year end is essential.
- If Bill is passed, ensure your fund correctly calculates earnings above thresholds.
- Be aware of timing lag: when a threshold is exceeded, tax applies moving forward on earnings, but not retrospectively.
## Takeaways
If your superannuation balance is heading toward or exceeding $3 million—or especially $10 million—strategic planning is required to mitigate additional tax liabilities. Low income earners meanwhile stand to gain from expanded super tax offsets. Understanding when changes take effect will be critical.