Compliance

Staying Compliant: Division 296 Super Balance Rules and Payday Super Changes

New rules for super balances and super contributions affect both high-wealth individuals and employers—understand your obligations to comply.

By NomadicTax Research Team • 5 min read • July 30, 2026

## What’s New in Superannuation Compliance ### Division 296 Tax (Large Super Balances) - **Effective 1 July 2026**, if your **total super balance (TSB)** exceeds **$3 million** at year-end, an additional **15% tax** will apply to the portion of earnings above that threshold. ([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)) - If the balance exceeds the **very large super balance threshold (VLSBT)** of **$10 million**, an extra **10% tax** applies to earnings above that mark. ([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)) ### Payday Super Reforms - From **1 July 2026**, employers must make super contributions at the same time as salary/wages are paid (the “payday super” rule). ([ato.gov.au](https://www.ato.gov.au/law/view/document?LocID=%22COD%2FLCR2026D3%2FNAT%2FATO%2Fft7%22&PiT=99991231235958&utm_source=openai)) - Closure of the **Small Business Superannuation Clearing House (SBSCH)** as of 30 June 2026. Existing users must transition to alternative payment methods by that date. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-to-pay-super/small-business-superannuation-clearing-house?=redirected_sbsch&utm_source=openai)) ## Who Is Affected? - **High-net-worth and high super balance individuals**: Those with $3 million+ balances. - **Fund trustees & SMSFs**: Responsible for reporting earnings, applying thresholds, and calculating taxes for super members. ([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)) - **Employers**: Timing of contributions must align with paydays; systems/processes may need adjustment. ([ato.gov.au](https://www.ato.gov.au/law/view/document?LocID=%22COD%2FLCR2026D3%2FNAT%2FATO%2Fft7%22&PiT=99991231235958&utm_source=openai)) - Small businesses using the SBSCH need to change their processes. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-to-pay-super/small-business-superannuation-clearing-house?=redirected_sbsch&utm_source=openai)) ## Compliance Steps You Can Take - **For Individuals with large super balances**: • Check if you will cross the $3M or $10M threshold at either the end or just before the year begins. ([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)) • Work with your super fund or SMSF to understand how “relevant earnings” are reported. Divide the earnings over thresholds correctly. - **For Employers**: • Review payroll systems to ensure super payments are scheduled for each pay run, not just monthly or quarterly. • Train payroll and HR staff on new rules and deadlines to avoid SG charges or penalties. - **For SMSFs & Trustees**: • Ensure reporting requirements are met promptly—keep accurate records of member balances, earnings, and trigger thresholds. • Where SBSCH was used, transition to compliant payment methods and obtain any needed documentation before closure. ([ato.gov.au](https://www.ato.gov.au/businesses-and-organisations/super-for-employers/paying-super-contributions/how-to-pay-super/small-business-superannuation-clearing-house?=redirected_sbsch&utm_source=openai)) ## Risks of Non-Compliance - **Penalties and SG charges** may apply where employers fail to meet payday super obligations. Delays could incur liabilities. ([ato.gov.au](https://www.ato.gov.au/law/view/document?LocID=%22COD%2FLCR2026D3%2FNAT%2FATO%2Fft7%22&PiT=99991231235958&utm_source=openai)) - **Tax shortfall or unexpected high tax bills** for individuals who exceed the super balance thresholds without planning. Super funds will report—tax will be assessed later. ([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)) ## Takeaway Summary - If your super balance is trending toward or beyond $3M, plan now—structure earnings, contributions or withdrawals with tax efficiency. - Employers need to align pay and super payments immediately to avoid complications. - Old systems like the SBSCH are phased out; don’t delay migrating. Compliance with these reforms isn’t optional—it’s necessary for avoiding penalties and optimizing your tax outcomes.