A clear guide for people with larger super balances
Division 296 has attracted a lot of attention – and a lot of confusion.
Here’s the key point upfront:
This change only affects people with very large super balances.
The legislation has now passed Parliament and will take effect from 1 July 2026.
What is Division 296?
Division 296 introduces an additional tax on super earnings that relate to balances above certain high thresholds.
It doesn’t remove super’s tax advantages – it simply limits how much concession applies at the very top end of the system.
Who does it apply to?
Division 296 only applies if your total super balance exceeds $3 million.
Under the new rules:
- Earnings linked to balances between $3 million and $10 million face an additional 15% tax
- Earnings linked to balances above $10 million face an additional 25% tax
- Both thresholds will be indexed over time
This affects a very small percentage of Australians.
What is actually taxed?
The tax applies to earnings, not your entire balance.
The updated legislation moved away from taxing unrealised gains and instead focuses largely on realised, taxable earnings – addressing one of the biggest earlier concerns.
The tax is assessed at an individual level, similar to how Division 293 works, and can generally be paid from super.
A simplified example
If someone has $4 million in super, only the portion above $3 million is relevant.
If that super earns income during the year, a proportion of those earnings may face an additional 15% tax – bringing the tax rate on that slice closer to company tax rates.
Everything below the threshold continues under the usual super tax rules.
Why the government introduced this change
Super remains one of Australia’s most tax‑effective structures.
Division 296 is designed to better target tax concessions, while still preserving super as a powerful long‑term planning tool.
Notably, the same legislation also expanded LISTO – improving outcomes at the lower end of the system.
Planning with clarity
For people affected by Division 296, this is not a reason for rushed decisions.
It does mean:
- Reviewing how super fits into your broader wealth structure
- Planning for future tax assessments
- Making thoughtful, long‑term decisions rather than reacting to headlines
