Superannuation Update 2026

Division 296 Tax
Explained Simply

New rules are coming for large super balances from 1 July 2026. If you’re near or above $3M, now is the time to understand the impact and plan ahead.

If you have a large super balance, it’s important to understand what this new tax means, why it has been introduced, and the practical steps you and your adviser should be considering.

While this measure will not affect most Australians, it is highly relevant for individuals with total superannuation balances above the new thresholds.

How the Tax Will Apply

How the Tax Works

From an SMSF perspective, Division 296 is not simply based on the fund’s taxable income. The calculation starts there, but then a number of adjustments may need to be made.

These adjustments can include assessable contributions, exempt pension income, non-arm’s length income and income from certain pooled superannuation investments. In some cases, capital gains may also need to be adjusted, particularly where a small-fund CGT election has been made.

Once these earnings have been worked out, they are attributed to members using an actuarial percentage, and the ATO uses this to determine each individual’s tax liability.

Importantly, the tax is applied to the individual, not the fund. It can be paid personally or released from super.

Next Steps

If your super balance is near or above the threshold, early advice is critical.

This includes modelling your exposure, reviewing CGT elections, and understanding cashflow and reporting requirements.

It’s also an opportunity to review whether super remains the best structure for your investments moving forward.

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Given the evolving nature of financial regulations and conditions, the accuracy and reliability of information may change over time. Users are urged to consult with a qualified professional for personalised advice.

Please be aware that the information is not a substitute for financial advice.