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Published Tuesday 27th April 2026

 

The rules for taxing very large superannuation balances have changed.

From 1 July 2026, Division 296 applies an additional tax to certain earnings linked to superannuation balances above $3 million. This is a targeted measure. It will not affect most superannuation members.

For people who may be affected, the priority is understanding how the rules work and whether they create any tax or cash flow considerations in their circumstances.

What has changed

Division 296 introduces an additional 15% tax on the proportion of earnings attributable to the part of a person’s total superannuation balance above $3 million.

This is assessed at the individual level. It looks at your total superannuation balance across all super funds, not just one account.

There is also an additional tier for balances above $10 million. That tier applies to a much smaller group.

Why this has attracted attention

A key issue is how earnings are worked out for Division 296 purposes.

Broadly, the calculation looks at the change in your total superannuation balance over the year, with adjustments for contributions and withdrawals. This means the outcome is not limited to income actually received or gains on assets that have been sold.

As a result:

  • increases in asset values may be reflected in the calculation even where no sale has occurred
  • the tax outcome may change from year to year depending on market movements
  • a tax liability may arise without a matching cash receipt

This may be particularly relevant where superannuation assets are less liquid, such as property or certain business-related investments.

Who may need to review their position

A review may be worthwhile if:

  • your total superannuation balance is close to or above $3 million
  • your superannuation balance is expected to continue growing
  • your superannuation includes illiquid or hard-to-value assets
  • you are considering future contribution, pension, or withdrawal decisions that could affect your overall position

This is not a broad-based change to the taxation of superannuation. It is directed at higher balance members.

What this does not mean

This change has sometimes been described too broadly.

It does not mean:

  • all superannuation is now taxed at 30%
  • everyone with superannuation will be affected
  • immediate restructuring is always necessary

For most people, the existing concessional tax treatment of superannuation remains unchanged.

What to do next

If you may be affected, the sensible next step is to confirm the facts before making decisions. That usually means reviewing:

  • your total superannuation balance across all funds
  • the types of assets held within superannuation
  • the possible tax impact under Division 296
  • whether any cash flow issues could arise if tax becomes payable

Any action should be considered in the context of your broader financial position, estate planning, and long-term retirement objectives.

 

For general information only. The application of Division 296 depends on your balance, asset mix, and personal circumstances. Tax, cash flow, and strategy outcomes can vary, and individual advice should be based on your specific situation.