Division 296 tax began on 1 July 2026, adding an extra 15% tax on the share of superannuation earnings attributed to total super balances above $3 million, plus a further 10% above $10 million. It applies to a small share of super members, with the first assessments issued after 30 June 2027.
Key facts
| What changed | Detail |
|---|---|
| Large super balance threshold (LSBT) | $3,000,000 |
| Very large super balance threshold (VLSBT) | $10,000,000 |
| Extra tax above $3m | 15% on attributed earnings |
| Extra tax above $10m | Further 10% on attributed earnings |
| Takes effect | 1 July 2026 (2026-27 earnings) |
How Division 296 tax works
Division 296 is charged at the individual level, not the fund level. If your total super balance (TSB) at 30 June exceeds $3 million, the ATO calculates the proportion of your earnings for the year attributable to the balance above that threshold and taxes it at an extra 15%, on top of the 15% funds already pay. If your TSB exceeds $10 million, a further 10% applies to earnings attributable to the portion above that higher threshold — a combined extra 25% on that top slice. The tax is levied on the individual, so it's calculated across all of a person's super interests combined, not fund by fund — if you hold balances across several funds, the ATO aggregates your total super balance to work out whether you're over either threshold before apportioning the earnings.
Why unrealised gains are no longer part of the calculation
The original 2023 proposal would have worked out earnings from the growth in your total super balance over the year, which would have included unrealised capital gains on assets that haven't been sold. That was the most debated feature of the measure. On 13 October 2025 the government changed the design, and the law that passed (the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026) uses a realised earnings approach aligned with existing income tax concepts. Your super fund calculates your share of the fund's earnings and reports it to the ATO, which then taxes the proportion that relates to the part of your balance above each threshold.
Who is actually affected
Only individuals with a total super balance above $3 million at the end of a financial year are in scope — a small fraction of super members, concentrated in self-managed super funds with large property or business holdings. If your balance is well under $3 million, Division 296 has no direct effect on you, though you may want to keep an eye on your growth if you're a high income earner already paying Division 293 tax on contributions. It's worth noting Division 296 and Division 293 are separate measures: Division 293 is an extra 15% tax on concessional contributions for high income earners, while Division 296 taxes a share of investment earnings once your total balance passes $3 million, regardless of your income.
How the thresholds change over time
Both the $3 million and $10 million thresholds are indexed to CPI, in increments of $150,000 and $500,000 respectively, so they will rise gradually rather than staying fixed. That indexation is designed to stop the tax capturing more members purely through inflation and investment growth over time.
What this means for your pay
Division 296 tax is assessed separately from your income tax return and doesn't change your regular pay or super guarantee contributions. If your balance is nowhere near $3 million, focus instead on the changes that do affect most people this year, like the higher contribution caps. Check your position with our superannuation calculator and see how it compares with existing high-income super tax settings on our Division 293 tax guide.