Tax Planning

Super Overhauls: Navigating Australia’s New Div-296 Tax on High Super Balances

From 1 July 2025, individuals with super balances over A$3 million face new tax rates on earnings. Learn how Division 296 works, thresholds, and strategies to manage impact.

By NomadicTax Research Team • 5-8 min read • March 6, 2026

## What is Division 296 and Who It Hits The **Better Targeted Superannuation Concessions** measure, known as **Division 296**, started on **1 July 2025** and applies from the **2025-26 income year** onwards. It **reduces tax concessions** for individuals whose **total superannuation balance (TSB)** exceeds **A$3 million** at the end of an income year([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-30-october-2023?utm_source=openai)). Key thresholds: - Up to **A$3 million**: concessional tax rate remains **15%**. - Between **A$3 million and A$10 million**: **effective concessional rates** increase to **30%** on earnings. - Above **A$10 million**: rate rises to **40%** on earnings above that threshold. ## How the New Rules Work—Dividends of Example Suppose Jane has **A$5 million** in her super fund at **30 June 2025**. Earnings on the first A$3 million are taxed 15%. The **A$2 million** above A$3m but below A$10m is taxed at 30%. Jane will be affected for all earnings above the threshold even if balances fluctuate during the year, based on the **balance at year-end**([au.andersen.com](https://au.andersen.com/wp-content/uploads/2026/02/AA_AU_AUSTRALIA_TAX_UPDATE_FEBRUARY_2026.pdf?utm_source=openai)). ## Which Funds & Situations Are Affected - Members of **APRA funds**, **SMSFs (Self-Managed Super Funds)**, and some **Defined Benefit Funds**, especially where assets or interests are large.([au.andersen.com](https://au.andersen.com/wp-content/uploads/2026/02/AA_AU_AUSTRALIA_TAX_UPDATE_FEBRUARY_2026.pdf?utm_source=openai)) - Defined benefit interests require valuation under specific methods outlined in exposure drafts. The calculation of earnings for such interests is being refined.([treasury.gov.au](https://treasury.gov.au/consultation/c2024-478149?utm_source=openai)). - Thresholds ($3m, $10m) will be **indexed to CPI** over time.([au.andersen.com](https://au.andersen.com/wp-content/uploads/2026/02/AA_AU_AUSTRALIA_TAX_UPDATE_FEBRUARY_2026.pdf?utm_source=openai)). ## Planning Strategies to Mitigate Impact - **Timing of withdrawals or rollovers**: balancing amounts below threshold before 30 June to avoid exposure in that year. - **Diversification**: Holding some super assets in strategies that generate lower taxable earnings or capital gains under favorable CGT rules. - **Defined benefit fund planning**: Accurately value your defined benefit interests years in advance, especially if near thresholds. - **Adjusting contribution levels**: Considering non-concessional vs concessional contributions to control total super balance if approaching A$3 million. ## Reporting & Compliance Tips - Keep excellent records of all super balances at **30 June** annually. Funds will need to report accurately to the ATO.([au.andersen.com](https://au.andersen.com/wp-content/uploads/2026/02/AA_AU_AUSTRALIA_TAX_UPDATE_FEBRUARY_2026.pdf?utm_source=openai)) - Stay tuned for exposure draft regulations that support this legislation with precise valuation rules.([treasury.gov.au](https://treasury.gov.au/consultation/c2024-478149?utm_source=openai)). - Seek professional advice if your situation spans **large defined benefit interests** or multiple types of super interests. ## Bottom Line If you're an individual with super savings approaching or exceeding **A$3 million**, Division 296 is a game changer. The larger your super, the more you’ll pay. Act early: - Assess your super balance forecasts - Plan contributions and withdrawals around threshold dates - Understand defined benefit valuation rules before they bite. With the law effective from **1 July 2025**, compliance kicks in immediately for **2025-26**. Don’t wait to see, plan to act.