Financial Planning
Understanding Division 296
New legislation is set to change how high-balance superannuation is taxed in Australia. If your total super balance exceeds $3 million, Division 296 affects you. We're here to help you understand what it means, and what to do about it.
LET'S START AT THE BEGINNING
What is Division 296?
Division 296 – part of the federal government’s Building a Stronger and Fairer Super System reforms— is legislation that introduces an additional tax on superannuation earnings for individuals with large super balances. Here’s what you need to know at a glance.
Who does it affect?
Any individual whose Total Superannuation Balance (TSB) — the combined value of all their super accounts — exceeds $3 million. It is estimated to affect around 80,000 Australians initially. Both the $3 million and $10 million thresholds are indexed, which will limit bracket creep over time.
At a Glance
How is Division 296 tax calculated?
Earnings attributable to the portion of your balance between $3m and $10m are taxed an additional 15% (bringing the effective rate to 30%). Earnings on balances above $10m attract an additional 25% (effective rate of 40%).
What counts as "earnings"?
Under the legislation, only realised earnings are captured — dividends, interest, rent, and realised capital gains. The controversial proposal to tax unrealised gains has been removed from the tabled Bill.
When does it start?
Division 296 tax is proposed to commence on 1 July 2026. The first tax assessments will be issued after 30 June 2027. Note: the legislation has not yet passed Parliament and remains subject to change.
Articles & Episodes on Division 296
WEBINAR RECORDING
Understanding the New Division 296 Super Tax
In this recorded webinar, Strategy Advisers Ishara Rupasinghe and Lucy Pentelow unpack the complexities of the new Division 296 tax rules, covering who will be impacted, practical strategies to help reduce your Division 296 liability, and guidance on when to seek professional advice.
FAQ’s
We hear the same questions often. Here are clear answers to the ones that matter most.
Does the $3 million threshold apply per person or per couple?
The threshold applies per individual. Each spouse or partner has their own Total Superannuation Balance assessed independently. A couple could theoretically have a combined balance of up to $6 million before either person is affected — though the death and reversionary pension rules create complexity for couples that warrants careful planning.
I’m in a retirement phase – does Division 296 still apply to me?
Potentially, yes. Division 296 is calculated at the individual level, not the fund level. If your Total Superannuation Balance exceeds the threshold, the tax may apply to the portion of earnings attributable to that excess — even if your fund is in pension phase. The interaction with pension tax exemptions is nuanced and worth discussing with us directly.
What can I do to manage my Division 296 exposure?
This depends heavily on your individual circumstances – including your age, tax position, estate planning goals, and the scale of your exposure. The right approach isn’t one-size-fits-all. The legislation includes a transitional rules for the first year (financial year 2026-27) that provides additional flexibility. Acting prematurely could have unintended consequences. We’re happy to talk through what makes sense for your specific situation.
Let's Talk About Your Position
Division 296 is complex and evolving. Knowing your position before legislation passes gives you time to plan thoughtfully — not reactively. We're here to help you navigate it clearly and confidently.
IN THE NEWS
Australian Financial Review: 3 ways to beat the new super tax
The new super tax, “Division 296,” is prompting many high-balance super members to rethink their strategy.
Ishara Rupasinghe, Senior Strategy Adviser at Evans & Partners, spoke with Andrew Hobbs at The Australian Financial Review for “3 ways to beat the new super tax”, sharing insights into how Division 296 may affect investors and the practical strategies available to manage its impact.