Division 296 tax legislation passes parliament: What it means for your superannuation
By David Maddock | 17/03/2026
The much-talked-about Treasury Laws Amendment Bill 2026 was passed by the federal government on 10 March 2026. This bill includes the Division 296 tax on superannuation balances above $3 million and $10 million.
The majority of Australians won’t be impacted by this measure. For those who are, it represents a meaningful change to how their superannuation is taxed and may influence how they structure their long-term retirement savings.
What is Division 296?
Currently, while your superannuation is in the accumulation phase – i.e. while you’re still working and adding to your balance – investment earnings within your superannuation are generally taxed at 15%.
Division 296 changes that, introducing an additional tax on earnings for superannuation balances above certain thresholds. The changes only impact superannuation balances of $3 million and above.
| Super balance | Effective tax rate on earnings* |
| Up to $3 million | 15% (standard super tax rate) |
| $3 million – $10 million | 30% (existing 15% + additional 15%) |
| Above $10 million | 40% (existing 15% + additional 25%) |
* Unrealised capital gains are not taxed as originally proposed in the draft legislation.
Importantly, the higher tax rates don’t apply to the entire super balance. They only apply to the portion of earnings above each threshold. It’s important to note that your entire superannuation balance counts toward Division 296 tax. For retirees in pension phase, your entire superannuation balance counts toward this new tax. For example, if you have a pension account of $2 million and a superannuation account of $1.5 million, your total super balance for Division 296 tax is $3.5 million and you’ll pay additional tax on the earnings above $3 million.
Another important thing to note is that the additional tax is assessed to the individual rather than the super fund; however, you can elect to have the additional tax liability paid from your super accounts.
Division 296 tax will come into effect from 1 July 2026, with the first assessments relating to the 2026–27 financial year. In the 2026–27 financial year, there is the opportunity to reduce your superannuation balance below $3 million by making withdrawals before 30 June 2027 to avoid Division 296 tax if you are eligible to do so. In future financial years, making withdrawals may not help reduce this tax as it will be applied to your super balance at the start of the financial year or end of the financial year, whichever super balance is higher.
Planning ahead
Despite the Division 296 changes, superannuation remains one of the most tax-effective structures for retirement savings. The change highlights the importance of reviewing strategies regularly, as there is no one-size-fits-all approach to managing the Division 296 tax. It will take reviewing your overall tax position to determine the best strategy for you. For those close to the $3 million and $10 million thresholds, this is going to require reviewing your superannuation on an ongoing basis.
The $3 million threshold means that the measure will affect a relatively small number of people today, and this threshold will be indexed by inflation in future years. But if your balance is approaching the threshold or you expect it to grow significantly over time, it’s advisable to review how your superannuation fits within your broader wealth strategy. This may mean considering factors such as contribution strategies, asset allocation and long-term tax efficiency.
Speak with your adviser
If you would like to understand how the Division 296 changes may affect your circumstances, speak with your Apt adviser. They can help review your superannuation strategy and ensure it remains aligned with your broader financial objectives.
General Advice Warning
The information provided in this blog does not constitute financial product advice or a recommendation to purchase a particular product. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners Pty Ltd is not a registered Tax Agent. You should consider your individual situation and seek tax advice from a registered tax agent before making any decision based on the content of this document. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
