Compliance
Superannuation Balances Over $3 Million: Understanding Division 296 and Its Reporting Requirements
Individuals with superannuation balances exceeding $3 million face new tax rules from 1 July 2025—here’s how Division 296 works, what funds must report, and how to prepare.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What is Division 296 (Better Targeted Super Concessions)?
Australia’s government has introduced **Better Targeted Superannuation Concessions**, formalised through *Division 296* of the Income Tax Assessment Act, targeting individuals with total super balances above **$3 million** at the end of the 2025–26 financial year. Individuals above this threshold will be taxed **15% on the proportion of earnings** attributable to the amount above $3 million. ([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-17-june-2025?utm_source=openai))
## Key Dates & Who Is Affected
- **Effective from** financial year **1 July 2025** onwards. ([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-17-june-2025?utm_source=openai))
- **Applies to** anyone whose total superannuation balance at 30 June 2025 exceeds $3 million. ([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-17-june-2025?utm_source=openai))
- **Funds impacted** include SMSFs, large retail or industry funds, and defined benefit funds. ([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-17-june-2025?utm_source=openai))
## Reporting & Compliance Requirements
- Super funds (excluding SMSFs) must **report additional information** via bulk data exchange by using **Online Services for Business**. ([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-17-june-2025?utm_source=openai))
- For SMSFs, new labels on the SMSF annual return will collect the required information starting from the **2026 financial 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-17-june-2025?utm_source=openai))
- **Successor fund transfers (SFTs)** between 1 July 2025 and Royal Assent need modifications in reporting—funds and transfers must match the protocols. ([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-17-june-2025?utm_source=openai))
## Practical Examples
- Susan has $5 million in super at 30 June 2025. Under Division 296, only the earnings attributable to $2 million (over $3 million threshold) are taxed at 15%. The first $3 million of her balance earns earnings taxed under existing concessional settings.
- John holds a defined benefit interest and his fund calculates his total super balance with special valuation methods; these valuation changes are now part of Div 296’s operating setup. Funds are raising concerns about such valuation complexities. ([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-17-june-2025?utm_source=openai))
## What Funds Should Do Now
- Update record-systems to identify balances over $3 million, including defined benefit portions.
- Provide super fund members with clear communication about how Division 296 works and how it may affect them.
- Ensure data exchange compliance: non-SMSFs via bulk data exchange, SMSFs via the right labels.
- Watch for final guidance from ATO and Treasury as some details are still in development.
## Strategic Planning Tips
- Individuals near the threshold may review whether contributions or rollovers just before 30 June 2025 might push them over the threshold—though rules about timing and valuations may limit options.
- Funds may need to plan for operational changes: system updates, training, and member communication before Tax Time 2026.
**Takeaway**: Division 296 introduces a **new layer of tax** for super balances above $3 million, effective from 1 July 2025. Both individuals and super funds need to update practices to comply with reporting and valuation requirements ahead of that date.