Superannuation has just seen its most significant tax change in years. Division 296, a new tax on very large super balances, has passed Parliament and takes effect from 1 July 2026. If you have a self-managed super fund (SMSF) or a large balance in any fund, it is worth understanding how the new rules work and whether they affect you.

The good news for most people: Division 296 only applies to individuals with a total super balance above $3 million, so the majority of Australians will not be affected. But for those who are, or who are approaching that threshold, some early awareness and planning can make a real difference. At FinTax Partners in Greenslopes, Brisbane, we help SMSF trustees and high-balance members understand the changes and work with their advisers on the way forward.

What Is Division 296?

Division 296 is a new, additional tax aimed at reducing the tax concessions on very large superannuation balances. It applies extra tax to the portion of your superannuation earnings that relates to the part of your total super balance (TSB) above certain thresholds. Importantly, it is a personal tax assessed to you as an individual, not a tax on your super fund, although you can generally elect to have it paid from your super fund, similar to how Division 293 tax works. It applies whether your super is in an APRA-regulated fund or a self-managed super fund.

How Division 296 Works?

The Thresholds and Rates Division 296 uses two tiers, based on your total super balance:

• For the portion of earnings attributable to a balance between $3 million and $10 million: an additional 15% tax applies, on top of the existing fund tax.
• For the portion of earnings attributable to a balance above $10 million: an additional 25% tax applies, on top of the existing fund tax. Both the $3 million and $10 million thresholds will be indexed over time, which helps prevent more people being caught by the tax through inflation alone.

Only Realised Earnings Are Taxed An earlier version of this policy proposed taxing unrealised gains (increases in the value of assets you have not sold). That controversial element was removed before the law passed. Division 296 now applies only to realised earnings, such as dividends, interest, rent, distributions and realised capital gains.

 When It Starts Division 296 applies from 1 July 2026. The first measurement point is 30 June 2027, so individuals whose total super balance exceeds $3 million at that date will be among the first assessed, with assessments issued after that.

Who Does Division 296 Affect?

 Division 296 affects individuals whose total super balance exceeds $3 million. This includes balances held across all your funds, not just your SMSF. SMSF members are more likely to be affected than the average fund member, because SMSFs are more commonly used to hold larger balances and lumpy assets such as property. If your balance is below $3 million and unlikely to cross it soon, the new tax will not apply to you. If you are near or above the threshold, it is worth understanding your position.

What SMSF Members Should Consider?

There is no need to panic, but there is value in being informed. Depending on your circumstances, the areas worth reviewing with your accountant and licensed financial adviser include:

• Your current total super balance and how close it is to the $3 million threshold
• Making sure your SMSF asset valuations are accurate and up to date, as valuations affect your TSB
• The nature and timing of realised earnings within your fund
• How Division 296 interacts with your broader retirement, estate and investment strategy
• Whether any transitional measures or elections available under the new rules are relevant to your fund