The Latest News On Division 296

After years of debate, uncertainty, and multiple rounds of revision, the Division 296 tax has now passed both the House of Representatives and the Senate. The Bills cleared the Senate on 11 March 2026 and received Royal Assent on 13 March 2026.

The tax will take effect from 1 July 2026.

This is a significant milestone. Here is everything you need to know.

What Is Division 296?

Division 296 introduces an additional tax on superannuation earnings for individuals with a Total Superannuation Balance (TSB) above $3 million.

It is designed to reduce the tax concessions available to those with very large super balances. The Government’s position is that superannuation should support retirement savings, not be used as a tax-minimisation vehicle for wealth accumulation.

Division 296: A Case Study

Let’s break it down.

‘Alex’ has a total superannuation balance of $5.6 million at 30 June 2027.

They received $30,000 in concessional contributions and withdrew $80,000.

Because Alex’s superannuation balance exceeded $3 million at the end of the financial year, Division 296 tax applies.

Follow this visually below:

Quick FAQs

Who does it affect?

Anyone with a TSB above $3 million as at 30 June 2027 (the first measurement date).

The tax applies across all superannuation accounts, including SMSFs, retail, and industry funds. It is assessed at the individual level, not the fund level.

How much additional tax will I pay?

The legislation introduces a tiered structure:

+ Balances between $3 million and $10 million: an additional 15% tax on earnings attributed to that portion, meaning earnings in that range are effectively taxed at 30%.

+ Balances above $10 million: a further 10% tax on earnings above that tier, bringing the effective rate to 40% on that portion.

Is this law yet?

Yes! The Bill has now passed both the House of Representatives and the Senate, and has received Royal Assent.

Are unrealised gains taxed?

No. One of the most significant changes from the original proposal is that unrealised (paper) gains will not trigger a Division 296 liability.

The tax is based on realised earnings, consistent with existing income tax concepts.

Is the $3 million threshold indexed?

Yes. Both the $3 million and $10 million thresholds will be indexed to inflation.

The $3 million threshold increases in $150,000 increments and the $10 million threshold in $500,000 increments.

When does it actually kick in?

The tax applies to earnings accrued from 1 July 2026, with the first balance test date being 30 June 2027.

This means the first assessments will be issued in the 2027-28 financial year.

Who pays the tax?

You do, personally.

However, you can elect to have the tax paid from your superannuation fund, similar to how Division 293 works.

What action is required?

There are a number of strategies worth exploring with your advisers, depending on your circumstances:

Reviewing your total superannuation balance and modelling your likely position at 30 June 2027.
Considering the mix of liquid and illiquid assets in your fund, particularly if you hold property or unlisted investments that could create liquidity challenges when paying the tax.
Reviewing Binding Death Benefit Nominations and estate planning documents, as Division 296 can interact meaningfully with these.
Exploring whether redistributing wealth across family members or adjusting investment structures makes sense.
Considering whether to do nothing, as this may genuinely be the right call depending on your situation.

Beyond the Headlines

Hear from our Co-Founder and CEO, Chartered Accountant Shane McKenna, on Division 296, and follow along with his example model to see how things are not always as bad as they may seem.

The takeaway?

It is important not to make rushed decisions. Some actions, like withdrawing funds prematurely, can have significant tax consequences and may not be reversible.

What happens next?

Our team will be proactively reaching out to clients who may be affected by Division 296.

If you have a TSB approaching or above $3 million, or if you hold significant assets within an SMSF, we will be in touch to discuss your position and work through the options with you.

Our advisers can help you understand how it may affect you, covering for example:

Potential tax consequences.
SMSF restructuring opportunities.
Retirement income implications.

In the meantime, if you have questions or want to start that conversation sooner, please reach out to your Aintree Group adviser.

Reach Out

The Latest News On Division 296

What Is Division 296?