Tax Planning
Tax Planning for Ultra-High Super Balances: Navigating Division 296
With changes from 1 July 2026 under Division 296, those with super balances above $3 million (and $10 million) face new tax on earnings — here's how to plan effectively.
By NomadicTax Research Team • 5-8 min read • August 12, 2026
## What is Division 296?
From 1 July 2026, individuals with a **Total Super Balance (TSB)** above **$3 million** at the end of the financial year face an extra tax — called **Division 296 tax**. This isn't a tax on the balance itself, but on the **earnings** tied to the portion of the balance above that threshold. ([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 TSB goes above **$10 million**, you’ll pay an additional 10% (on top of the 15%) for earnings linked to the excess 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))
## Who will this impact?
- Members of **SMSFs**, large APRA-regulated funds, defined benefit funds, and people who hold multiple super interests — because TSB covers all of them summed together. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/sites/default/files/2026-02/PLS_working_group_key_outcomes_20_January_2026.pdf?utm_source=openai))
- If you have other super funds (besides your main one), notify trustees so they can report earnings correctly. ([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))
- Special cases like defined benefit interests where the member hasn’t taken an end benefit, child recipients of a super income stream, or structured settlement contributions for injury, may be **exempt or deferred**. ([softwaredevelopers.ato.gov.au](https://softwaredevelopers.ato.gov.au/sites/default/files/2026-02/PLS_working_group_key_outcomes_20_January_2026.pdf?utm_source=openai))
## Practical tax-planning strategies
| Strategy | What to do | Why it helps |
|---|---|---|
| **Monitor your year-end super balance** | Estimate your TSB well before 30 June to avoid unexpected extra tax. Consider delaying non-essential concessional contributions. | Lowering earnings above thresholds helps reduce exposure to the Division 296 tax. |
| **Diversify retirement savings outside super** | Hold some investments personally or via trusts (taxed at personal/investment tax rates) instead of within super. | Allows flexibility since Division 296 only affects super earnings over the thresholds. |
| **Timing investment income** | Shift investment earnings (capital gains, dividends) to years where your TSB is under thresholds, where possible. | Reduces or defers Division 296 liability. |
| **Review defined benefit interests** | If you’re in a defined benefit scheme, understand how the earnings will be deferred until you take an end benefit. | Helps with cash flow planning and avoids surprise tax bills. |
## Examples
- **Scenario 1**: Alice has a TSB of \$4 million. Only the earnings related to the \$1 million above the \$3 million threshold are taxed at 15% under Division 296. If her earnings are \$100,000 on that excess portion, she pays 15% on that \$100,000.
- **Scenario 2**: Brendan has a \$11 million TSB. Earnings on the portion between \$3 million and \$10 million are taxed at 15%, and earnings on the portion above \$10 million are taxed at **25%** (15% + extra 10%) under the scheme.
## Timing & Compliance
- Assessments for Division 296 tax for 2026-27 will be issued **late 2027-28**, once funds report relevant earnings. ([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))
- Funds must report on time. For SMSFs and large funds, keeping accurate records of earnings and balance thresholds is essential. Exemptions must be properly documented.
## Bottom line
If your superannuation balance is (or might be) above \$3 million, planning ahead is essential. Timing contributions, managing earnings, and keeping clear documentation can help you limit exposure to this new tax. Speak to your financial adviser or tax professional to understand how these changes affect *your* super strategy.