Division 296 Super Tax – What You Need To Know

The Federal Government’s proposed Division 296 superannuation tax has now passed the Senate, with the legislation approved by a vote of 33 to 22. The bill had already passed the House of Representatives last week, meaning the measure will now move forward.
 
The legislation introduces an additional tax aimed at individuals with a total super balance above $3 million.
 
Debate in the Senate was limited after the Government introduced a “guillotine motion”, which places a time limit on discussion. With the support of the Greens, the Government had the numbers required to pass the legislation.
 
While the new rules are targeted at higher balances, the announcement has generated broader discussion around the stability of superannuation policy and how future changes may affect long-term retirement planning.
 
Below are some of the common questions we are currently receiving from clients.
 
Who will be affected by the new tax?
The measure is designed to apply to individuals with total superannuation balances above $3 million.
 
What is the additional tax?
An additional 15% tax will apply to earnings associated with the portion of a super balance that exceeds $3 million.
 
Does the tax apply to the entire super balance?
No. The additional tax only applies to the earnings relating to the amount above $3 million, not the entire balance.
 
When is it expected to start?
The measure is expected to apply from 1 July 2026, with the first tax assessments likely to occur after the end of that financial year.
 
Should I be making changes to my super now?
For most people, it is still too early to make significant changes. Superannuation decisions should always be considered carefully, as moving funds out of super can have tax and estate planning implications.
 
We will continue to monitor any further guidance released by the Government and the Australian Taxation Office and keep clients informed as more details become available.

Lola Manitto, SMSF Specialist Consultant & Renee Francis, SMSF Client Manager