There are moments in financial planning where a proposal becomes reality—and with it, the need for clear, forward-thinking strategy.
With the passage of the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026, Division 296 is now law. This represents a structural shift in how higher superannuation balances are taxed in Australia.
Importantly, while the number of people affected today may be limited, the number impacted over time will be materially larger.
What is Division 296?
Division 296 introduces an additional 15% tax on earnings attributable to superannuation balances above a defined threshold.
Key features:
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Applies to individuals (not funds)
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Targets super balances above $3 million
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Imposes an additional 15% tax on earnings relating to the portion above that threshold
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The tax is assessed to the individual, not the super fund
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Payment can be made:
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Personally, or
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Via a release authority from the superannuation fund
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This is a critical distinction:
👉 The liability sits with the member, not the trustee or the fund itself.
When does it apply?
Division 296 applies from the 2026–27 financial year.
This means:
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The first assessments will relate to balances and earnings from 1 July 2026 onward
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Clients have a defined window to review and position their superannuation structures before full impact is felt
Who is affected?
At face value, Division 296 applies to:
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Individuals with superannuation balances exceeding $3 million
However, the real story is broader.
Consider this:
A couple with:
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$2 million each in superannuation today
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A long-term growth strategy
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And time for compounding
…may find themselves exceeding the threshold individually in the future.
The critical planning issue: Survivorship
One of the most important—and often overlooked—impacts is what happens when one partner passes away.
In many cases:
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Superannuation benefits consolidate to the surviving spouse
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Resulting in a single balance that may exceed $3 million
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Even if neither individual breached that level during their lifetime
This is where Division 296 becomes a future certainty, not just a current consideration.
Worked Example: $3.5 Million Super Balance
Let’s illustrate how Division 296 may apply in practice.
Scenario:
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Total superannuation balance: $3,500,000
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Excess above threshold: $500,000
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Assume annual earnings of 7%
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Total earnings: $245,000
Step 1: Proportion above threshold
500,0003,500,000=14.29%\frac{500,000}{3,500,000} = 14.29\%3,500,000500,000=14.29%
Step 2: Earnings attributable to excess
245,000×14.29%≈35,000245,000 \times 14.29\% \approx 35,000245,000×14.29%≈35,000
Step 3: Additional Division 296 tax
35,000×15%=5,25035,000 \times 15\% = 5,25035,000×15%=5,250
Outcome:
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Additional tax payable: ≈ $5,250
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This is in addition to any existing superannuation tax framework
Important clarification — Pension phase
Even if the member is in retirement (pension phase):
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The Division 296 tax still applies to the portion above $3 million
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This represents a shift from the traditional understanding that pension phase earnings are tax-free
Strategic implications
Division 296 does not remove the value of superannuation.
However, it changes the marginal decision-making for higher balances.
Key considerations:
1. Super is still highly effective
Even with an additional 15%:
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It remains competitive relative to personal marginal tax rates
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Particularly for disciplined, long-term investors
2. Structure now matters more than ever
Future wealth accumulation may need to be balanced across:
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Superannuation
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Personal investments
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Family trusts
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Corporate structures
The objective is not to abandon super—but to optimise across structures.
3. Monitor your trajectory
It is no longer enough to assess where you are today.
You must consider:
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Where your super balance is heading
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How compounding will affect your future position
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Whether thresholds may be exceeded over time
4. Plan for the inevitable
For many clients, Division 296 is not a question of if—but when.
This is particularly true where:
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Super balances are already significant
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Contributions are ongoing
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Investment returns are strong
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Or succession events will occur
Final thought
Division 296 is now law.
But its true impact will not be felt in a single year.
It will unfold over time—quietly, structurally, and progressively.
For many clients, the opportunity is not to react, but to plan early and position wisely.
