Division 296: what the revised super tax means for you
Written and accurate as at: Jun 04, 2026 Current Stats & Facts
Division 296: what the revised super tax means for you
After more than three years of consultation, political debate, and significant revision, the Division 296 tax has now passed Parliament. It will commence on 1 July 2026, with the first tax assessments expected following lodgement of 2026–27 tax returns — meaning most affected members will receive their first bill in the 2027–28 financial year. If your total superannuation balance (TSB) is near or above $3 million, this measure directly affects you.
Here’s an up-to-date summary of what the final legislation looks like and what you should be doing now.
|
Commencement date 1 Jul 2026 First bills in 2027–28 |
Lower threshold $3M CPI-indexed, +$150k increments |
Upper threshold $10M CPI-indexed, +$500k increments |
How the tax works
The revised legislation introduces two tiers of additional tax, applied on top of the existing 15% concessional tax rate that already applies to superannuation earnings. The tax is calculated on a proportional basis — applies only to the earnings attributable to the portion of your balance above each threshold.
| TSB range | Additional Div 296 tax | Effective Total Rate |
| Below $3 million | Nil | 15% |
| $3M - $10M (proportional) | +15% | 30% |
| Above $10M (proportional) | +25% | 40% |
Importantly, the higher rates apply only to the proportion of earnings attributable to the balance above each threshold — not to your total super earnings. If your balance sits between $3M and $10M, only the fraction of earnings referable to the excess above $3M is taxed at the higher rate.
Key details of the Div296 Tax:
Still a personal tax, not a fund tax.
Division 296 is assessed on you as an individual member — not on the SMSF itself. The ATO will issue you a personal assessment after your annual return is lodged. You will have the option to pay from personal funds or elect to release the amount from your superannuation account.
Losses carry forward, not refund.
If your attributed superannuation earnings in a year are negative — because your TSB falls — you cannot claim a refund of Div 296 tax. Instead, the loss is carried forward to offset future Div 296 earnings in subsequent years.
The $3M threshold is per individual, not per couple or per fund.
Each member is assessed separately based on their own TSB across all superannuation interests, regardless of how many funds they belong to.
Key Changes:
Unrealised Gains
One of the most controversial features of the original proposal — taxing unrealised capital gains — has been removed. Under the revised legislation, Division 296 will apply only to realised earnings: interest, dividends, rent, and capital gains from assets actually sold. This removes the liquidity problem that had been a major concern for SMSFs holding direct property or other illiquid assets.
Thresholds will rise with inflation.
Both the $3 million and $10 million thresholds will be indexed to the Consumer Price Index. The $3 million threshold will increase in $150,000 increments, and the $10 million threshold in $500,000 increments. This addresses a major concern from the original proposal, where a fixed threshold would have gradually captured more Australians over time simply through the natural growth of super balances.
Example:
| Member with $4.5M balance | |
| TSB at 30 June 2027 | $4,500,000 |
| Realised earnings for year | $300,000 |
| Proportion above $3M threshold | 33.3% ($1.5M ÷ $4.5M) |
| Taxable Div 296 earnings | $100,000 |
| Div 296 tax payable | $15,000 |
What you should be thinking about now
With the legislation now passed and the 1 July 2026 start date confirmed, there is a finite window to review your position and implement any strategies before the first measurement date arrives.
| Balance |
Review your TSB across all superannuation interests — not just your SMSF. The ATO will aggregate all accounts. If your combined balance is approaching $3 million, model projected growth to understand when you are likely to be caught. |
| Spouses |
For couples, the threshold applies per individual. Equalising balances between spouses where possible remains a valuable strategy. If one partner is significantly above $3M and the other is below, there may be scope to rebalance over time. |
| Structure |
Consider whether it still makes sense to hold all assets inside superannuation. In some circumstances, withdrawing funds (if eligible) to reduce TSB below the threshold, or holding certain assets outside the fund, may be worth modelling. |
| Asset Sales |
Since the tax now applies only to realised earnings, the timing of asset disposals within your SMSF becomes more significant. Spreading gains across financial years — where commercially sensible – or utilizing unrealized capital losses — may help manage annual Div 296. If you were planning on selling investment properties with large unrealized capital gains, review your timing on this strategy. |
| Pensions |
Members in pension phase are still subject to Div 296. Pension account balances count toward TSB. Drawdown strategies and the timing of pension commencement may warrant revisiting in light of the new rules. |
| Contributions |
Assess whether continuing to make contributions that push your balance further above $3M remains tax-effective. For some members, redirecting contributions to a spouse or to non-super investments may produce a better after-tax outcome. Investment returns and cashflow modelling would be required to understand which strategy is best. |
Next steps
The first Div 296 measurement date is 30 June 2027. That gives us roughly 12 months to review your position, model your likely exposure under the new tiered structure, and consider any appropriate planning steps before the tax begins to apply.
We recommend scheduling a review meeting so we can assess your individual situation, particularly if your TSB is above $3 million or is projected to cross that threshold within the next few years. The revised design is meaningfully better than the original proposal — but it is still a real and ongoing cost for high-balance members that deserves careful planning.
This information is general in nature and not intended to be personal advice. You should seek professional advice should these matters be relevant to you. LBWFP Pty Ltd is an Authorised Representative of LBW Wealth Pty Ltd ABN 56 652 382 128 AFSL 534569. Please see our website www.lbwca.com.au or call 03 5221 6111 for more information on our available services.