Division 296 tax (proposed): what it is and what it could mean for you

Where things are up to

• Draft legislation was released on 19 December 2025.

• Bill has been introduced to Parliament

• If the Bill passes, it’s proposed to start from 1 July 2026, with the first assessments expected to be issued in 2027–28.

What’s being proposed

The Division 296 Bill proposes:

Two thresholds — $3 million and $10 million, both indexed in line with inflation

A focus on realised earnings — consistent with existing income tax concepts

Tiered additional tax rates — the earnings on the portion of a super balance that is above $3 million and up to $10 million will be taxed at 30% (additional 15%). The earnings on the portion that exceeds $10 million will be taxed at 40% (additional 25%). These higher rates apply only to the earnings on each relevant portion of the balance, not the entire account.

Important

These details may change. The Division 296 tax Bill has not yet been passed into law.

Who this could affect

You may be affected if:

• Your Total Super Balance (TSB) is more than $3 million on 30 June 2027 (across all your super accounts), and
• You have earnings that fall within the final rules.

Even if some of your super is in retirement phase, it still counts towards your overall TSB. 

Total superannuation balance | Australian Taxation Office

Do I need to do anything now?

Not at this stage.

Because the Bill has not yet passed, it’s generally best to:

• Stay up to date, as details may change
• Avoid making major decisions based only on the proposal until the law is final

If the Bill passes, Division 296 tax will take effect on 1 July 2026, giving you time to review your options before it is officially implemented.

Who might benefit from financial advice?

Advice may be helpful if you:

• Have (or are approaching) $3 million+ in super
• Use a self-managed super fund, especially with property or other illiquid assets
• Have a large balance but can’t access super yet
• Can access super and want to understand your options in the context of your full financial situation
• Have estate planning needs that may interact with super decisions

How the tax would be paid

Under the proposed design, Division 296 would be a personal tax, assessed to you — not a tax paid by your super fund – although it can be paid from your super balance.