Tax Planning
Planning for the New Division 296 Super Tax: What Ultra-High Balance Members Must Know
For super members with balances over $3 million, Division 296 introduces targeted taxation on excess earnings. Here’s how to plan ahead and minimise the new super burden.
By NomadicTax Research Team • 5-8 min read • August 12, 2026
## What is Division 296?
Starting from **1 July 2026**, superannuation earnings over certain balance thresholds face extra taxation under Division 296. For the 2026-27 year: the **Large Super Balance Threshold (LSBT)** is $3 million; earnings above that are taxed at 15%. For balances exceeding **$10 million** (Very Large Super Balance Threshold, VLSBT), an additional 10% applies to those excess earnings. ([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?
- Individuals whose **Total Super Balance (TSB)** at the end of the financial year is above $3 million.
- For those over $10 million, portions above that higher threshold face **an extra layer of tax**.
- **Defined benefit income stream owners**: earnings from these, when no end-benefit has been taken, have tax deferred until the benefit is claimed.
- **Exemptions** include child recipients of super income streams, or those who have received structured settlement contributions for personal injury. ([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))
## Planning Strategies: What You Can Do Now
### 1. Monitor your TSB throughout the year
Because the ATO uses the **greater** of your balance just before the year starts and at year end to determine if you exceed LSBT, keeping your balance under threshold early in the year can help. Consider transferring or consolidating funds early.
### 2. Timing asset disposals
Capital gains or investment income earned late in the year can push you over thresholds. If possible, defer gains until after 30 June or spread income across tax years.
### 3. Review super fund structure or growth
Evaluate whether switching investment options to lower-growth profiles in the final quarter of a year might reduce excess earnings.
### 4. Leverage exempt structures
If part of your balance is in defined benefit income streams without an end benefit, the extra tax can be **deferred** until you commence the end benefit. Also, structured settlement amounts or injured parties have certain protections.
## Example
Sarah has a TSB of $3.5 million at 30 June 2027, and her earnings for the year are $200,000 (after expenses). The $3 million LSBT means the excess $500,000 earnings portion above that threshold is taxed at **15%**, so she’ll have an extra $75,000 Division 296 tax. If part of that TSB (say $2 million) is in a defined benefit income stream with no end benefit claimed, then tax on the earnings from that component could be deferred.
## Key Takeaways
- Division 296 applies only to **excess earnings above thresholds**, not your entire super balance.
- Thresholds will **index over time**, so planning should consider future increases too.
- Keep accurate records of fund balances, earnings, and understand components like defined benefits.
- Seek professional advice if your balance is near or above $3 million, because small actions (timing of earnings, selecting investment options) can yield substantial tax savings.