From 1 July 2026, proposed changes to superannuation tax concessions, commonly referred to as Division 296, are expected to impact individuals with larger super balances.
While the measure targets a relatively small group, it introduces new considerations around how superannuation is taxed, structured, and managed over time.
If your super balance is approaching the proposed thresholds, it is worth understanding how the rules are intended to apply and what this could mean in practice. For a broader overview of the changes, you can also read our earlier update on Division 296 super tax changes.
Why Division 296 Has Been Introduced
The aim of Division 296 is to better target superannuation tax concessions.
Rather than changing the system broadly, the focus is on individuals with higher balances, with the intention of limiting the level of concessional tax treatment on earnings above certain thresholds.
This reflects a broader shift toward balancing long-term sustainability with fairness across the system.
Who the Changes May Apply To
Based on current legislation, the measure is intended to apply to individuals with total superannuation balances above $3 million. In broad terms:
- Balances up to $3 million continue under existing tax settings
- Earnings attributable to balances above $3 million may be subject to an additional 15% tax
This would bring the effective tax rate on those earnings to up to 30%, depending on the circumstances.
Importantly, the tax applies at an individual level rather than at the fund level.
How the Tax Is Expected to Work
Division 296 introduces a different way of calculating tax on super earnings.
Rather than relying solely on realised income, the calculation is based on changes in a member’s total super balance over the year, with adjustments for contributions and withdrawals.
This means:
- Unrealised gains may be included in the calculation
- Market movements can influence the tax outcome, even without asset sales
The ATO is responsible for calculating the liability and issuing assessments to affected individuals.
The tax can then be paid personally or released from super.
Key Considerations for SMSFs
For those with self-managed super funds, the introduction of Division 296 may add another layer of complexity.
Considerations may include:
- Valuation of assets, particularly where investments are not frequently traded
- Timing of transactions and how gains are recognised
- Administrative and reporting requirements
This does not necessarily mean SMSFs are less effective but it does mean greater attention to detail will be required. You can explore how this fits into your broader strategy through self-managed super fund advice.
Planning Ahead - What Matters Most
At this stage, the focus should be on awareness and preparation, not reaction.
If your super balance is near or above $3 million, it may be worth:
- Reviewing your current position and projected growth
- Understanding how different investment scenarios may impact outcomes
- Considering how super fits within your broader wealth strategy
In some cases, this may lead to discussions around diversification of investment structures or timing of future contributions.
Looking at the Bigger Picture
Superannuation remains one of the most tax-effective structures available.
Division 296 does not remove that but it does change the way benefits apply at higher balance levels.
For many individuals, the question is not whether super is still effective, but how it fits alongside other structures and long-term goals.
This is where aligning your super strategy with broader advice becomes important, particularly where retirement planning, estate considerations, and investment decisions overlap.
The Bottom Line
Division 296 is a targeted change that will only impact a small proportion of individuals, but for those affected, it introduces a shift in how super earnings are taxed.
The key is to stay informed, understand how the rules apply to your situation, and plan early.
With the right advice, you can continue to use super effectively as part of your long-term strategy while adapting to the evolving landscape.
If you would like to understand how these changes may apply to you, it is worth reviewing your position sooner rather than later.
Contact Trekk Advisory to explore your options and plan ahead with confidence.
Trekk Advisory provides accountant-led tax, bookkeeping, and advisory services for Australian business owners. This article is general in nature and does not constitute personal advice. Please speak with a qualified adviser regarding your specific circumstances.
