Division 296 Tax

Division 296 is an additional tax on individuals whose total superannuation balance exceeds $3 million. Legislated in March 2026 and applying from 1 July 2026, it imposes an extra 15% on the share of realised earnings attributable to the balance between $3 million and $10 million, and an extra 25% on the share above $10 million. Both thresholds are indexed (the $3 million figure rising in $150,000 steps). An earlier version that would have taxed unrealised gains and was not indexed was dropped before the law passed. It sits on top of ordinary super tax and chiefly affects very large balances, often held in an SMSF. For estate planning, it can make holding wealth inside super less attractive at the top end and may influence whether you draw down, restructure, or leave more outside your super death benefit.

Division 296 matters mainly to high-balance members and can change long-standing strategies of accumulating wealth inside super. Example: with $4.2 million in his SMSF, Frank reviewed his plan because, from the 2026–27 year, Division 296 adds 15% to the realised earnings on the slice between $3 million and $10 million, prompting him to consider drawing some funds out and gifting through his Will. The first assessment covers the year ending 30 June 2027; because the detail is complex, anyone near the threshold should get current professional advice.