Tax Planning
Preparing for Super Changes Under Division 296: What High-Balance Members Need to Know
New legislation targets super balances over A$3 million—understand when it applies, how it’s calculated, and strategies to limit additional tax.
By NomadicTax Research Team • 5-8 min read • March 25, 2026
## What is Division 296?
Division 296 is a new regime introduced under the **Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026**. ([aph.gov.au](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2526/26bd048?utm_source=openai)) This measure limits tax concessions on superannuation for individuals with **Total Superannuation Balances (TSB)** exceeding **A$3 million**, effective from the 2025-26 financial year. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-bc598107-7819-44fd-a84c-9ded73fe60b1?utm_source=openai)) Specifically, earnings attributable to the excess above A$3 million will be taxed **at 15%**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-bc598107-7819-44fd-a84c-9ded73fe60b1?utm_source=openai))
## Implication: Who Is Affected and When
- Applies to individuals whose super balance **exceeds A$3 million at 30 June 2026** and beyond. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-bc598107-7819-44fd-a84c-9ded73fe60b1?utm_source=openai))
- Only affects earnings on the portion **above A$3 million**; the principal amount below remains under standard concessional taxation.
- This rule does not impose a cap on how much can be contributed or held in super—just changes how earnings are taxed when balances exceed the threshold. ([aph.gov.au](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2526/26bd048?utm_source=openai))
## Effective Dates & Interaction with LISTO
- Division 296 tax becomes effective **from the 2025-26 year onwards**. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-bc598107-7819-44fd-a84c-9ded73fe60b1?utm_source=openai))
- The **Low Income Super Tax Offset (LISTO)** thresholds are being raised: income threshold goes from A$37,000 to **A$45,000**, and the **maximum offset** increases from **A$500 to A$810**, effective 1 July 2027. ([aph.gov.au](https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2526/26bd048?utm_source=openai))
## Actionable Strategies for High-Balance Super Members
**1. Monitor Your Total Super Balance**
Ensure you track your super balance at 30 June each year. If projected to exceed **A$3 million**, plan your contributions and investment strategy accordingly.
**2. Consider Investment Selection Within Super**
Earnings on conservative or lower-return assets might still breach the threshold—so aligning your higher-risk investments to years where the excess is minimal may help.
**3. Time Withdrawals or Roll-overs**
While super access rules are strict, consider whether combining pensions or using transition-to-retirement mechanisms can reduce taxable earnings above A$3 million. Seek expert advice.
**4. Use LISTO Increases**
Those with modest super balances and income still qualify for the **boosted LISTO** from 2027, enhancing after-tax returns for lower-income earners.
## Compliance and Reporting Requirements
- Super funds, SMSFs included, will need to report balances and earnings relative to TSB thresholds.
- Consistency in valuation at 30 June will be critical—members should ensure their super funds have accurate asset valuations.
These changes reset the playing field for large-balance super members, increasing tax on earnings over large thresholds—but also enhancing support for those with lower balances.