Tax Planning
Super Balance Tax & Indices: Navigating Division 296 and Super Thresholds from 1 July 2026
Superannuation earning more than $3m won’t stay untouched—Australia’s new Division 296 tax reshapes super returns, thresholds and liabilities starting mid-2026.
By NomadicTax Research Team • 5-8 min read • June 13, 2026
## Overview of the Division 296 Reforms
From **1 July 2026**, a new additional tax under **Division 296** comes into effect targeting **realised earnings** on **superannuation balances** over certain thresholds. ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai))
### Key Thresholds & Rates
| Total Super Balance (TSB) | Excess Over Threshold | Rate on Excess Earnings* |
|---------------------------|------------------------|----------------------------|
| Over **$3 million** up to **$10 million** | Amount above $3m and ≤ $10m | **30%** (i.e. **+15%** extra tax) ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai)) |
| Above **$10 million** | Amount above $10m | **40%** (i.e. **+25%** extra tax) ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai)) |
> *This is the additional tax on **earnings** above those thresholds—not on the entire super balance.
### Other Related Changes from the 2026 Federal Budget
- The **Lower Income Super Tax Offset (LISTO)** income threshold will rise from **$37,000** to **$45,000**, effective **1 July 2027**, with a max payment bumped to **$810**. This aligns with the top of the 2nd tax bracket. ([csc.gov.au](https://www.csc.gov.au/advisers/news/2026-05-better-targeted-super-concessions?utm_source=openai))
- Superannuation contributions caps will increase from **$30,000 → $32,500** (concessional) and **$120,000 → $130,000** (non-concessional) from **1 July 2026**. The general bring-forward rule limit for the non-concessional cap also moves from **$360,000 → $390,000**. The **transfer balance cap** will increase from **$2 million → $2.1 million**. ([csc.gov.au](https://www.csc.gov.au/news-and-insights/2026/may-13-federal-budget-2026?utm_source=openai))
## Implications & Strategy Considerations
- Only a small segment of Australia’s super investors have TSB above $3m—this new tax mostly targets the very wealthy. But for those affected, it could **significantly increase tax on investment earnings**.
- Since thresholds are indexed, balances could creep into affected zones over time.
## What You Should Do Before 1 July 2026
- **Review your super balance**: If close to $3m, consider strategies like spreading balances across fund types (subject to rules).
- **Consider realising gains or losses** prior to the reform, especially for assets inside super showing large unrealised gains, if that aligns with your broader investment plan.
- **Check LISTO eligibility**: If your income is below $45,000, ensure you’ll benefit from the higher threshold and increased offset.
## Example
> *Mary has a total super balance of $5m for 2026–27. If her fund earned $200,000 in realised earnings, only the portion of earnings on $2m (excess above $3m) would attract 30% tax under Division 296; the rest taxed as per usual super earnings rules.*
## Practical Tips & Warnings
- Be cautious about **liquidity**: to cover the extra tax, you may need more cash to wash earnings taxed at higher rates.
- Don’t attempt risky “super splitting” or overly aggressive strategies—ATO may scrutinize arrangements aimed at evading the rules.
- Consult a **financial adviser**, especially if you have defined benefit components or hold large fund balances close to thresholds.
{Super planning isn’t just for the future—it’s immediately relevant before July’s fiscal year.}