Division 296, the additional tax on large superannuation balances, commenced on 1 July 2026. If you have a substantial amount in superannuation, it’s worth understanding how this measure works and what it might mean for your planning.
Who does it affect?
Division 296 applies to individuals with a total superannuation balance (TSB) above $3 million. A higher rate applies to balances above $10 million. If your balance sits below $3 million, this measure doesn’t affect you.
How does Division 296 tax work?
The tax applies to the proportion of your superannuation earnings attributable to the balance sitting above the relevant threshold:
- Balances between $3 million and $10 million: an additional 15% tax applies on earnings above the $3 million threshold.
- Balances above $10 million: an additional 25% tax applies on earnings above the $10 million threshold.
Both thresholds will rise gradually over time. CPI indexation lifts them in increments of $150,000 and $500,000 respectively.
Importantly, the tax applies only to realised earnings such as dividends, interest, rent, and realised capital gains. The usual one third CGT discount still applies to assets you’ve held for more than 12 months. The tax is assessed to you as an individual, not to the fund, but you can pay it using amounts you release from superannuation.
When does Division 296 apply?
Division 296 first applies for the 2026/27 financial year. A transitional rule applies in this first year. Your assessment will use your total superannuation balance at 30 June 2027, rather than the higher of your opening and closing balance. The broader approach starts from 2027/28 onward.
The ATO won’t issue the first assessments until after the 2026/27 financial year ends.
This timing matters. If you’re considering any adjustments or restructuring of your superannuation in response to this measure, put those changes in effect by 30 June 2027 so they count toward the first year’s assessment.
What should you do now?
Most people don’t need to take immediate action. The 30 June 2027 deadline for first year adjustments gives you time to consider your position properly, rather than react hastily.
That said, if your superannuation balance is approaching or above $3 million, it’s a good time to start thinking about your broader wealth structure. Consider how much sits inside super versus outside it, and whether your current arrangements remain the most tax effective option for you.
Speak to us
Every situation is different, and the right response depends on your personal circumstances, goals, and existing structures. If you’d like to discuss how Division 296 applies to you, please get in touch with Mark O’Toole, Daniel Lunardi and the Ascent Private Wealth team.
The advice provided here is general in nature only as, in preparing it we did not take account of your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should consider the relevant Product Disclosure Statement before making any decision relating to a financial product.