Case Studies
Superannuation and Trust Rules: Case Study of High-Wealth Individuals Under Division 296 and Trust Minimum Tax
As of 1 July 2026, individuals with large superannuation balances and trust holders must prepare for a higher super earnings tax and a 30% minimum tax on discretionary trusts—this study breaks down how these changes may hit your estate or structure.
By NomadicTax Research Team • 6 min read • May 26, 2026
## Division 296: Super Tax for High Balances
Starting **1 July 2026**, if your **superannuation** balance exceeds **AUD 3 million**, you’ll face **higher tax rates on earnings** under *Division 296* of the tax law:
- From **$3 million to $10 million**, earnings taxed at **30%**.
- Above **$10 million**, taxed at **40%**.
This is aimed at high-wealth individuals with large super balances. The extra tax starts applying automatically—including on pre-existing balances—and taxpayers should check their exposure.([pwc.com.au](https://www.pwc.com.au/tax/monthly-tax-updates/april-2026.html?utm_source=openai))
## Trusts: Minimum Tax from July 2028
Discretionary trusts will face a **minimum 30% tax rate** on taxable income from **2028-29** onward. This is to limit income splitting or benefiting from lower bracket rates via trusts.([pwc.com.au](https://www.pwc.com.au/federal-budget?icid=FB19-&utm_source=openai))
## Case Example: High-Net-Worth Jane and Her Trusts
**Background:** Jane has a self-managed super fund with **$4.5 million** and she operates a discretionary family trust that distributes income among beneficiaries—including some minor or low-income individuals.
**Before changes:** Super fund earnings taxed at concessional rates; trust distributions may be taxed at beneficiaries’ marginal rates—some quite low—thus reducing overall tax.
**After changes:**
- **Super:** For the portion of earnings above AUD 3 million, Jane’s fund will pay **30%** (or 40% if above 10 million).
- **Trust:** If trust income is not fully distributed or beneficiaries have very low rates, trustee will pay **at least 30%**; distributing solely to low-rate individuals may no longer yield major tax savings.
## What Structures Might Be at Risk?
- Trusts holding passive income with distributions to family members.
- Wealthy superannuation accounts beyond $3 or $10 million.
- Hybrid setups for nominal “income splitting” via trusts or beneficiaries in lower tax brackets.
## Practical Steps to Consider Now
- **Assess your super balance trajectory** and consider whether boosting contributions earlier or distributing earnings more proactively makes sense.
- **Review trust deeds and beneficiary allocations**, especially how income is distributed and whether there are fixed distributions versus discretionary ones.
- **Consider restructuring to fixed trusts or companies**, where the 30% minimum trust tax applies later, and beneficiaries taxed directly.
- **Plan for timing**, since these thresholds and rates are effective from specific dates (1 July 2026 for Division 296; 2028-29 for trust minimum tax).
## Compliance and Record-Keeping Tips
- Keep accurate **trustee resolutions** showing distributions; records of when and how income was allocated.
- Track **super fund earnings** separately—identify when your fund crosses the thresholds.
- Use projected income statements and forecasts to model whether the trust or super exceed thresholds, to avoid unexpected tax bills.
**Conclusion:** High-wealth individuals and those using trusts to manage income will see a material reshaping of their tax liabilities. Early adjustments of structure, distribution strategy, and clarity on timing will be key to minimising surprise impacts.