Australia · Explainer

Division 296

An additional tax on the earnings attributable to the part of a member's total super balance above $3,000,000, from 1 July 2026. Here is the measure as enacted — two tiers, a realised-earnings basis — with the working shown.

AU FY2026-27 Law From 1 July 2026 Last reviewed 31 July 2026

What it is

Division 296 imposes an additional 15% of tax on the share of a member’s superannuation earnings attributable to the part of their total super balance above $3,000,000, and a further 10% on the share attributable to the part above $10,000,000. It applies from 1 July 2026, which makes FY2026-27 the first income year assessed.

It is an individual-level tax worked out on total super balance, not a fund-level tax — a member with interests in more than one fund is measured on the combined position. The thresholds are indexed, and the detailed earnings calculation sits in regulations rather than in the Act.

Key figures

Division 296 start date
1 July 2026
Division 296 first threshold
$3,000,000
Division 296 additional rate — above the first threshold
15%
Division 296 second threshold
$10,000,000
Division 296 further additional rate — above the second threshold
10%
Effective tax on earnings attributable to balance above $10,000,000
Up to 40%

How it works, as enacted

Only part of a member’s earnings is exposed: the part attributable to balance above a threshold. That proportion is what the additional rates are applied to.

The structure

additional tax = earnings × [ (min(TSB, $10,000,000) − $3,000,000)⁺ ÷ TSB × 15% + (TSB − $10,000,000)⁺ ÷ TSB × 25% ]

The 25% on the top slice is the 15% first-tier rate plus the further 10% second-tier rate — the first tier does not apply twice.

  • Proportional, not a cliff. A member just above $3,000,000 has only a sliver of earnings exposed; the proportion rises with the balance and never reaches 100%.
  • Realised earnings. The tax attaches to earnings on a realised basis, which is the change that distinguishes the enacted measure from the original proposal.
  • Two tiers, indexed differently. $3,000,000 is indexed in $150,000 increments; $10,000,000 is indexed in $500,000 increments.
  • Assessed to the individual. The liability is calculated on the member’s total super balance, not inside a single fund’s return.

Worked examples

Both examples use the numbers exactly as the estimator below computes them.

One tier: a $4,000,000 balance

Total super balance at year end
$4,000,000
Attributed earnings for the year
$200,000
Share of balance above $3,000,000
25.0%
Earnings taxed at 15%
$50,000
Additional tax
$7,500

25.0% of $200,000 is $50,000; 15% of that is $7,500 — an effective 3.75% on the year’s earnings.

Both tiers: a $12,000,000 balance

Total super balance at year end
$12,000,000
Attributed earnings for the year
$600,000
Share from $3,000,000 to $10,000,000 → taxed at 15%
58.3% ($350,000)
First-tier tax
$52,500
Share above $10,000,000 → taxed at 25%
16.7% ($100,000)
Second-tier tax
$25,000
Additional tax
$77,500

The two slices are taxed separately: $350,000 at 15% and $100,000 at 25%. Even at this balance the effective rate on the year’s earnings is 12.92%, because the first $3,000,000 of balance is never in scope.

Division 296 estimator

Enter a member’s total super balance at the end of the income year and the earnings attributed to them for that year. The estimator applies the structure set out in the Act; the detailed earnings calculation sits in the regulations, so attributed earnings are an input rather than a derived figure.

$4,000,000

$200,000

Estimated additional tax

$7,500

Share of balance from $3,000,000 to $10,000,000
25.0%
Earnings taxed at 15%
$50,000
Additional tax at 15%
$7,500
Effective rate on attributed earnings
3.75%

Simplified illustration for education — not advice.

Practical points

  • Measurement timing matters. The proportion is driven by the balance measured at the end of the income year, so anything that moves the balance late in the year — contributions, pension payments, a revaluation — moves the exposed share as well as the earnings.
  • Total super balance is the whole picture. An SMSF-only view understates exposure for a member who also holds an APRA-fund interest; the test is on the combined balance.
  • Both thresholds are indexed. $3,000,000 is indexed in $150,000 increments; $10,000,000 is indexed in $500,000 increments. A projection that holds them flat overstates the liability in later years.
  • The mechanics live in regulations. Before you commit a precise figure to advice, read the earnings calculation in the regulations — the Act gives the structure, not the full method.
  • Nothing here is a switch-off. The additional tax is on a slice of earnings, not on the balance — worth stating plainly in a file note when a client has read otherwise.

Questions we get asked

Does Division 296 tax unrealised gains?
No. The measure that became law applies to realised earnings attributable to the part of a member's total super balance above $3,000,000. It was redesigned before passage, and summaries written between 2023 and early 2026 describe a different mechanism — check the date on anything you rely on.
When does Division 296 start?
It applies from 1 July 2026, so FY2026-27 is the first income year in scope. It was enacted by the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026, which passed the Senate on 10 March 2026.
Is the $3,000,000 threshold indexed?
Yes — indexed in $150,000 increments. The second threshold of $10,000,000 is indexed in $500,000 increments. A client just over a threshold this year may sit under it in a later year without doing anything.
What rate applies above $10,000,000?
A further 10% on top of the 15%, so earnings attributable to the balance above $10,000,000 carry 25% of additional tax. Adding the 15% tax on fund earnings, the combined rate on that slice is up to 40% — reached where the interest is in accumulation phase, and lower where it is in retirement phase, since fund earnings there are untaxed.
Is the tax assessed to the fund or to the member?
To the individual. It is calculated on the individual's total super balance rather than at fund level, so a member with interests in more than one fund is assessed on the combined position.
Where is the detailed earnings calculation set out?
In the regulations rather than the Act. The Act sets the thresholds, the rates and the proportioning; the mechanics of working out attributed earnings for a year sit underneath it — worth reading before you model a specific client precisely.

Sources

Sourced from the references below. The figures on this page come from the same reference file as the rates and thresholds page.