This may look familiar as there’s already something called Division 293 tax, which is a completely different thing. Div 293 is an extra 15% tax on high income earners’ super contributions if their income is above $250,000 a year. Div 296 is about the size of your super balance, not your income. Don’t get the two mixed up.

What Is Division 296?

Division 296 is a brand-new tax that starts from the 2026–27 financial year. It targets people with very large super balances, specifically, anyone whose total superannuation balance (TSB) is above $3 million. It doesn’t tax your whole balance. It only taxes the earnings linked to the portion of your balance that sits above the threshold.

The Rates:

• Up to $3 million: no extra tax
• $3 million to $10 million: 15% on earnings attributable to the amount over $3m
• Above $10 million: an extra 10% on top of that, on earnings attributable to the amount over $10m

The $3m and $10m thresholds aren’t frozen, they’re indexed to the Consumer Price Index (CPI), so they’ll rise over time with inflation.

How It’s Worked Out (In Three Broad Steps):

1. Your super fund reports your total fund earnings for the year to the ATO.
2. The fund works out what share of those earnings relates to your interest in the fund.
3. The ATO calculates what proportion of your balance sits above the $3m (and $10m) thresholds, and applies the tax to the relevant earnings.

For self-managed super funds (SMSFs) and similar, there’s a specific formula based on the average value of your share in the fund across the year. Defined benefit funds and things like lifetime pensions use a different method suited to those products.

Who’s Exempt

Children receiving a super income stream, and people covered by certain structured settlement payments (e.g. from an injury compensa

Paying It

You can pay Div 296 tax personally, have the amount released from your super fund, or split it between the two. If you want it released from your super, you need to lodge your election within 60 days of the assessment notice. If the balance is a defined benefit interest, payment of the tax attributable to it can be deferred until you actually start receiving the benefit.

Timing

The ATO won’t look at your TSB until 30 June 2027, and the assessment follows only after your fund reports the relevant earnings, generally issued within 84 days of that.

Division 296 adds a new layer of tax for people with very large super balances from 2026–27. For those approaching the $3 million threshold, understanding how the rules work will be an important part of future super and retirement planning.