Tax Planning
Protecting Your Retirement Savings: Division 296 Tax and Total Super Balance Changes
From 1 July 2026, earnings from super balances above the $3 million threshold will be taxed via Division 296, and defined-benefit pensions may be revalued for Total Super Balance—key considerations for high-balance retirees.
By NomadicTax Research Team • 5-8 min read • June 12, 2026
## What is Division 296 and Total Super Balance (TSB)?
**Division 296 Tax** is a regime that starts to apply earnings tax on superannuation balances that exceed a certain threshold. **Total Super Balance (TSB)** is the aggregate value of all of someone’s super assets used to determine entitlement to various super concessions. As of 2026-27, the **large super balance threshold** is set at **$3 million**. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo000003zaJNMAY/p00415155?utm_source=openai))
## Changes Effective from 1 July 2026
- Balances above $3 million will attract Division 296 Tax on the **proportion of annual concessional earnings** relating to the excess amount. This applies from the start of the **2026-27 financial year**. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo000003zaJNMAY/p00415155?utm_source=openai))
- Defined benefit pensions may have their values re-reported for TSB purposes differently—a move under legislative reform. If your super provides a pension based on defined benefits, the value used for TSB may change. This could affect eligibility for concessional caps and Division 296. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JRF000004jouP/p-00412363?utm_source=openai))
## Who Will Be Impacted Most?
- High net-worth individuals with **large super balances**, particularly those with defined benefit income streams.
- Retirees receiving significant reversionary pensions, because the TSB and Transfer Balance Account (TBA) rules include specific processes for how these sums are calculated and reported—e.g., the 12-month delay on TBA credits for reversionary pensions upon death. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo000003zaJNMAY/p00415155?utm_source=openai))
## Strategy & Examples
- *Jane * has $4 million in combined super. Her earnings above the $3 million threshold will incur Division 296 tax—meaning less concession for the excess portion.
- *Bill* has a defined benefit pension that under old reporting rules used a flat 16× annual pension value for TSB. Under upcoming legislative changes, actual valuation for TSB may differ. He will want to review his pension product and possibly commute or restructure parts if favorable.
## Action Plan You Can Take
- Verify the *current balance* of all your super accounts and estimate future growth. If you’re nearing $3 million, consider strategies like withdrawing, commuting, or adjusting contributions.
- Consult with your super fund on how defined benefit pensions will be valued post reform.
- Make sure your adviser reviews your Transfer Balance Account (TBA) implications, especially for reversionary pensions—knowing there is a 12-month period after death before a TBA credit arises. ([community.ato.gov.au](https://community.ato.gov.au/s/question/a0JMo000003zaJNMAY/p00415155?utm_source=openai))
- Keep records and reports tight. Legislative reforms are developing. Some parts (such as how TSB is computed for defined benefits) are not yet law, so stay updated as implementation details emerge.
High super balances bring both risk and opportunity. Planning deliberately now can safeguard your retirement benefits.