Tax Planning

Super Balances Above $3 Million? Understanding the New Division 296 Tax

If your superannuation balance exceeds $3 million or $10 million, a newly revived tax measure kicks in from 1 July 2026. Find out how it applies to you.

By NomadicTax Research Team • 6-7 min read • August 21, 2026

## What is Division 296 Tax? Division 296 introduces additional taxation on earnings from superannuation balances above certain thresholds. As of **1 July 2026** for the 2026-27 financial year: - **Large Super Balance Threshold (LSBT)**: $3 million - **Very Large Super Balance Threshold (VLSBT)**: $10 million ([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 your Total Super Balance (TSB) **exceeds $3 million**, you’ll pay **15% tax** on the proportion of super earnings above that threshold. If you exceed **$10 million**, an additional **10% “very large” tax** applies to earnings above $10 million. ([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)) ## How It Works - The tax applies **only to earnings** (investment gains) attributed to the amounts **above** each threshold—not the full balance. So if you had $4 million, only earnings on the $1 million above $3 million are taxed at 15%. - For super funds regulated by APRA and self-managed super funds (SMSFs), reporting obligations have been set. Funds must report your relevant super earnings tied to these thresholds to the ATO.([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)) ## Actionable Steps for Affected Individuals - Check your Total Super Balance as of **30 June** each year to see if you cross thresholds. Messaging is that both **start and end balances** may matter in future years, so maintaining clarity year-round is wise. ([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)) - Consider restructuring how your super is invested; shifting investments to lower-return or more stable assets may reduce earnings taxed. - For those nearing the LSBT or VLSBT, monitor contributions and withdrawals (where possible under law) to manage future tax exposure. ## Example Imagine Jane has a super balance of $3.5 million and earns 8% return ($280,000) in one year. Under the new Division 296: - For the $3 million threshold: the $0.5 million excess earns part of her return—if we assume earnings evenly across all assets, the excess earnings taxed at **15%** would be roughly $(280,000 * (0.5 / 3.5)) ≈ $40,000 earning above the LSBT; taxed at 15% = **$6,000**. - If she had $11 million instead, earnings on the $1 million above $10 million would be taxed at an extra 10%. ## Implications and Planning Tips - **Invest differently**: funds may offer segmentation or use different investment options to limit high volatility in the part above thresholds. - **Timing of withdrawals** or contributions where permissible might be relevant around 30 June cut-offs, especially for high net worth individuals. Ensure you involve super or tax advisers familiar with restrictions. - **Reporting and record-keeping**: maintaining accurate records of investment earnings, balance valuations, and transactions. You’ll receive notices and assessments in **latter half of 2027-28** after the 2026-27 year concludes. ([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)) ## Final Thoughts For many members with substantial super balances, this measure introduces a **new recurring tax burden**. Yet, it also provides clarity and predictability. Proactive investors and trustees can reduce unexpected liability with thoughtful strategy, timely record-keeping, and knowing what’s coming. This is best placed under Tax Planning, with **Medium-high** impact given it affects a narrowing but important group.