Division 296 is law, and it's now four months into its first year. The Treasurer's 10 March 2026 release says the Senate passed the bill without amendment. It became Act No. 8 of 2026 on 13 March, and the tax applies from 1 July 2026. If your super is over $3 million at 30 June 2027, the ATO will charge you an extra 15% on part of what your funds earned this year.
The word "part" matters. It's the part that lines up with the slice of your balance above $3 million. On a $4 million balance with $100,000 of reported earnings, that's $3,750 of extra tax, using the ATO's own worked example. It isn't 15% of the $1 million, which would be $150,000.
This is general information, not financial advice. It explains how the ATO says the tax works. It doesn't tell you what to do with your super.
What changed, and when
The tax was first announced on 28 February 2023. On 13 October 2025 the Government redesigned it. It added a second threshold at $10 million, indexed both thresholds, moved to realised earnings and pushed the start back a year. The redesigned version is the one that passed.
| Date | What happened |
|---|---|
| 13 October 2025 | Government announces the redesign: $3m and $10m thresholds, indexed, realised earnings, start moved to 1 July 2026 |
| 10 March 2026 | Bill passes the Senate without amendment |
| 13 March 2026 | Royal Assent, Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026, No. 8 of 2026 |
| 1 July 2026 | Division 296 applies from the 2026–27 income year |
| 30 June 2027 | The one balance that counts for 2026–27 |
| Later half of 2027–28 | First notices of assessment for 2026–27 expected |
Treasury's 10 March 2026 release says the policy will affect less than 0.5% of all Australians in 2026–27. At the 13 October 2025 press conference the Treasurer put the estimate at about 90,000 people with more than $3 million in super and about 8,000 with more than $10 million. Those are Treasury estimates, not ATO counts.
The rates
The ATO's Division 296 page, updated 29 June 2026, sets out two layers on top of the normal tax your fund pays.
| Balance (total super balance) | Extra Division 296 tax | Total tax on earnings in an accumulation account |
|---|---|---|
| Up to $3 million | None | 15% |
| Over $3 million | 15%, on the earnings that line up with the part above $3 million | 30% on that part |
| Over $10 million | A further 10% on the earnings that line up with the part above $10 million | 40% on that part |
The 30% and 40% totals come from the Government's 13 October 2025 announcement. Earnings on money in the retirement phase are normally tax-free, so the extra tax is added to nil there. The Commonwealth Superannuation Corporation's May 2026 adviser note puts the totals at 15% and 25% for pension accounts.
The thresholds are $3 million and $10 million for 2026–27. The ATO says they'll be indexed to inflation in steps, $150,000 for the $3 million line and $500,000 for the $10 million line, so they can move in later years.
How the ATO works it out
There are three steps, all on the ATO's How Division 296 tax is calculated page (updated 29 June 2026).
- Find your balance. Your total super balance (TSB) at 30 June 2027 counts every Australian super interest you have. Limited recourse borrowing amounts are left out.
- Find the share above the line. Take your TSB, subtract $3 million, and divide by your TSB. The ATO rounds that to two decimal places.
- Apply it to your earnings. Multiply your total super earnings for the year by that share. Then charge 15% on the result.
Here's the ATO's own example. Jordan has one super interest worth $4,000,000 at 30 June 2027, and his fund reports $100,000 of earnings.
- The share above $3 million is ($4m − $3m) ÷ $4m, which is 25%.
- His taxable super earnings are $100,000 × 25% = $25,000.
- His Division 296 tax is $25,000 × 15% = $3,750.
What it costs at different balances
The table below uses the same ATO formula with the same $100,000 of earnings at every balance. The earnings figure is ours, picked to make the balances comparable. Your fund will report your real number, and it won't be $100,000 for everyone.
| Balance at 30 June 2027 | Share above $3m | Taxable earnings | Extra tax | As a share of the $100,000 |
|---|---|---|---|---|
| $3,100,000 | 3.23% | $3,230 | $484.50 | 0.48% |
| $3,500,000 | 14.29% | $14,290 | $2,143.50 | 2.14% |
| $4,000,000 | 25.00% | $25,000 | $3,750 | 3.75% |
| $5,000,000 | 40.00% | $40,000 | $6,000 | 6.00% |
| $7,500,000 | 60.00% | $60,000 | $9,000 | 9.00% |
| $10,000,000 | 70.00% | $70,000 | $10,500 | 10.50% |
| $12,000,000 | 75.00% | $75,000 (plus $16,670 over $10m) | $12,917 | 12.92% |
The $12 million row adds the second layer. The share above $10 million is ($12m − $10m) ÷ $12m, which is 16.67%. That's $16,670 of the $100,000, taxed at a further 10%, or $1,667. The ATO works a $12 million case on a $500,000 earnings figure and gets $64,585.
▶ Extra Division 296 tax on $100,000 of earnings
A balance only a little over $3 million pays very little. Someone at $3.1 million with $100,000 of earnings owes less than $500, because only 3.23% of those earnings are taxed. The bill climbs as the balance gets further from the line.
2026–27 is a one-day test
For this first year only, the ATO looks at one number. If your TSB at 30 June 2027 is above $3 million, you can be assessed. If it's at or under $3 million that day, you aren't, even if you were over it a year earlier.
The ATO's example is Mary, who has $3,150,000 on 30 June 2026 and $2,950,000 on 30 June 2027. She isn't assessed for 2026–27. From 2027–28 the test widens: the ATO uses the greater of your TSB just before the start of the year and at the end of it.
Two other rules from the same page matter. If you die during 2026–27 you will never be liable for Division 296 tax. And a few groups are excepted or have their earnings excluded, including child recipients of a super income stream, people with a personal injury structured settlement contribution, and interests in foreign super funds.
What counts as "earnings"
The Government's 13 October 2025 redesign moved the tax to realised earnings. Your fund works out its Division 296 fund earnings, mostly from its taxable income or loss for the year, with adjustments for contributions and for income supporting pensions. It then attributes your share and reports it to the ATO. Your fund, not you, supplies this figure.
The ATO's APRA fund guidance adds a phase-in for capital gains in large funds. It counts only part of the fund's net capital gain, to recognise value built up before the law began:
| Income year | Share of net capital gain counted |
|---|---|
| 2026–27 | 20% |
| 2027–28 | 40% |
| 2028–29 | 60% |
| 2029–30 | 80% |
After 2029–30 there are no further adjustments. Small funds can instead elect to reset the cost base of their assets to market value at 30 June 2026, by the due date of the fund's 2026–27 annual return. SMSF members should ask their accountant or administrator about the election and about how the fund will report their share.
When the bill arrives
The ATO says 2026–27 assessments will begin issuing in the later half of 2027–28. After that:
- Payment is due 84 days after the notice of assessment. Interest applies if you pay late.
- You can pay from your own money or ask for a release from super. You have 60 days from the notice to elect a release. The election can't be withdrawn once it's made.
- The tax isn't deductible. That's from the ATO's Paying Division 296 tax page.
Not the same as Division 293
Division 293 is a different tax with a similar name. It adds 15% to concessional contributions when your income plus those contributions pass $250,000 (ATO, updated 24 August 2026). It looks at your income and what goes in. Division 296 looks at your balance and what it earns. You can owe one, both or neither. Our Division 293 calculator covers the first.
What you can check now
- Your total super balance. Log in to ATO online services through myGov, choose Super, then Information, then Total superannuation balance. The ATO shows your balance at 30 June of each year from 2016–17, and it can differ from what your fund account shows. The ATO's TSB page (updated 29 June 2026) explains why.
- Where you're headed. The balance projector shows whether your balance could pass $3 million and when.
- Your caps. Contributions raise your balance. The non-concessional cap calculator shows how much after-tax money you can still add, and the TSB also decides whether the bring-forward rule is open to you.
- Pension income. If you're drawing an account-based pension, the pension drawdown calculator shows the minimum you must take and how long a balance lasts.
- A proper plan. Moving money, changing a fund's investments or making withdrawals can have tax and cap consequences of their own. A licensed financial adviser or a registered tax agent can look at your whole position before you change anything.
General information only, not financial advice. Rates, thresholds and dates checked 3 November 2026 against the ATO, the Federal Register of Legislation and the Treasurer's media releases. Our dollar tables are our own arithmetic on the ATO's formula with an assumed $100,000 of earnings, so they show how the tax scales, not what you will pay. Speak to a licensed financial adviser or registered tax agent about your situation.