The Federal Government has released draft new superannuation tax rules (known as Division 296) aimed at reducing tax concessions for individuals with very large super balances.
The Draft Legislation was released just prior to Christmas and is currently open for industry consultation.
These rules are not yet law but are expected to apply from 1 July 2026 if passed, due to the closeness of this date, the Bill is expected to be introduced into Parliament in the next few months.
What’s changing?
If your total superannuation balance exceeds $3 million at the start of the financial year, part of your super earnings may be taxed at a higher rate.
Super earnings are currently taxed at 15%
Under Division 296, an additional 15% tax would apply to the portion of realised earnings linked to balances above $3 million.
Importantly, balances under $3 million are not affected.
Below is an example of how this would work.
Assume:
– Total super balance: $4 million
– Proposed threshold: $3 million
– Super earnings for the year: $200,000
Only the portion of the balance above $3 million is affected.
– Amount above the threshold: $1 million
– This represents 25% of the total super balance
– 25% of the year’s earnings = $50,000
Under Division 296, an additional 15% tax would apply to this $50,000.
Additional tax payable: $7,500
The remaining earnings linked to the first $3 million of super are not impacted and continue to be taxed under the existing super rules.
The tax is assessed personally and can generally be paid from your super account.
When does it start?
Proposed start date: 1 July 2026
First assessment year: 2026–27
What should you do now?
There is no immediate action required, but individuals with balances approaching or exceeding $3million should:
- Be aware the rules may change before becoming law
- Consider long-term strategies well ahead of commencement
- Contact us before making any structural or contribution decisions
We are keeping on top of these changes to the legislation and provide updates and strategies, as further detail and certainty becomes available.