At a glance
- •Extra 15% tax on super earnings attributable to Total Super Balance (TSB) above $3M
- •Higher rate applies on the portion above $10M
- •Includes unrealised gains (controversial)
- •$3M threshold is not indexed — more people affected over time
- •Special transitional rule for 2026-27 — only end-of-year TSB matters
- •Tax can be paid personally or released from super
How Division 296 is calculated
The formula is proportional rather than threshold-based. You calculate:
Proportion above $3M = (TSB − $3M) / TSB
Earnings = closing TSB − opening TSB + net withdrawals − net contributions
Division 296 tax = 15% × proportion × earnings
So if your closing TSB is $4M and earnings were $200,000, the proportion above $3M is 25%, and you pay 15% × 25% × $200,000 = $7,500 of Division 296 tax on top of the 15% your fund already pays on those earnings.
Worked examples
| Closing TSB | Earnings | Proportion | Div 296 Tax |
|---|---|---|---|
| $2,500,000 | $150,000 | 0% | $0 |
| $3,500,000 | $200,000 | 14.3% | $4,286 |
| $5,000,000 | $300,000 | 40.0% | $18,000 |
| $10,000,000 | $600,000 | 70.0% | $63,000 |
Illustrative only. Earnings include unrealised gains. Higher rates apply on the portion of balances above $10M.
How is this different from Division 293?
Division 293 is the existing 15% surcharge on concessional contributions for individuals with income + super over $250,000. Division 296 is brand new and applies to earnings within super when your total balance exceeds $3 million.
Division 293 →
Existing 15% tax on concessional contributions when your income + super exceeds $250,000
Division 296 (new)
New 15% tax on the earnings-portion attributable to super balances above $3 million
Frequently Asked Questions
Is Division 296 actually law?
Yes. Division 296 passed both Houses of the Australian Parliament on 10 March 2026 and received Royal Assent shortly after. It commences from 1 July 2026, with the first affected year being 2026-27.
How is the tax calculated?
You pay an additional 15% on the proportion of super earnings attributable to the part of your Total Super Balance (TSB) above $3 million. So if 25% of your balance is above $3M, then 25% of your earnings are subject to the extra 15%. Earnings include both realised and unrealised gains, less contributions.
What about the $10 million threshold?
A higher rate applies to the portion of earnings attributable to balances above $10 million — taking the total effective tax on that slice higher than 30%. Most affected members will only deal with the $3M tier.
Are unrealised gains really taxed?
Yes — this is the most controversial feature. Division 296 measures movement in TSB across the year, which includes paper gains on unsold assets. If your assets fall in value the following year, you can carry forward the loss to offset future Division 296 tax.
How does the first year work?
For 2026-27 only, there's a special transitional rule: only your end-of-year TSB (at 30 June 2027) is used to determine if you exceed $3 million. If your TSB at 30 June 2027 is below $3M, you owe no Division 296 tax for 2026-27 regardless of your starting balance.
Who actually pays this?
The ATO assesses Division 296 against the individual member, not the fund. You receive an assessment after lodging your tax return. You can elect to release the tax from your super fund or pay personally — either works.
Will the $3 million threshold be indexed?
No. The threshold is fixed at $3 million in nominal terms, meaning more people will be caught by Division 296 over time as super balances grow with inflation. This is a deliberate design feature.
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Related Resources
General information only — not financial or tax advice. Division 296 calculations are complex; consult a registered tax agent or financial adviser.
Last updated: 25 May 2026