New Changes To The Proposed Division 296: Here’s What You Need To Know!

Division 296 is not law yet and there may be more changes to come before it takes effect from 1 July 2026.

On 13 October 2025, the Treasurer announced a rework of the previously stalled Division 296 proposals.

The rework refocuses the policy on very large superannuation balances and addresses two of the biggest industry concerns: indexation of the threshold and taxation of unrealised gains.

Below we outline the key changes, who it affects, and practical steps members and advisers should consider.

What has changed?

Two indexed thresholds:

Division 296 will apply to earnings attributed to the portion of an individual’s Total Superannuation Balance (TSB) that sits above a $3 million threshold, with a second tier applying above $10 million.

Both thresholds will be indexed in future increases in set increments ($150,000 for the $3 million threshold and $500,000 for the $10 million threshold, as announced).

An additional tax rate on earnings above $10 million:

The additional tax rate of 15% will still apply to the earnings linked to superannuation balances above $3 million per person.

However, now, a further 10% tax will apply to the earnings linked to superannuation balances above $10 million.

No tax on unrealised gains:

Rather than measuring ‘earnings’ by changes in total superannuation balance, funds will report realised earnings attributable to affected members. Unrealised (paper) gains alone will not trigger Division 296 liability.

This removes a major concern that tax can apply to members purely because markets rose.

Delayed start date and first measurement:

The tax will now apply to earnings accrued from 1 July 2026, with the first balance test date being 30 June 2027. That means if your TSB is above $3 million at 30 June 2027 you will be among the first to receive an assessment.

Let’s compare the Government changes from our July article to October (now)…

Who is likely to be affected?

• Members with multiple superannuation accounts where one or more accounts have very high balances are the primary focus.
• High-net-worth individuals and those with long histories of tax‑effective contributions (including some self-managed superannuation fund members) are more likely to see an impact.

Practical steps and strategies for members and advisers.

• Review total superannuation balance: High-balance members should obtain a current TSB at 30 June 2026. You can also model likely positions at 30 June 2027.
• Consider consolidation where appropriate: Consolidating dormant accounts can reduce administrative complexity and clarify exposure to thresholds.
• Plan for liquidity: If Division 296 applies, members will need options for paying any personal liability or arranging to withdraw amounts from super. Early planning avoids rushed decisions.
• Withdraw funds (if you have access). Be careful of other tax implications.
• Redistribute wealth across family members. This could also help minimise Death Benefit Tax.
• Wait for detail before acting rashly: Some decisions can have tax consequences. You should not make these decisions without professional advice and clarity in the legislation.
• Do nothing! Depending on your situation, this might actually be the best strategy.

Always seek advice from your accountant and financial planner as this tax interacts with other areas like Capital Gains Tax (CGT) and estate planning.

For individual advice on Division 296 tax and how it may impact you, please reach out to your Aintree Group adviser.

Note: This post summarises the Government announcement as at October 2025. The final legal effect depends on the drafted legislation and ATO guidance. For tailored tax advice, please consult your tax adviser.

This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant and financial adviser.