You may have heard about the new tax on super balances over $3 million, known as Division 296 tax.
For most people, the key message is simple:
If your total super balance is under $3 million, this new tax generally won’t apply to you.
The new rules started on 1 July 2026 and apply to people with larger super balances.
What is Division 296 tax?
For the 2026–27 financial year, Division 296 tax can apply if your total super balance is more than $3 million at the end of the financial year.
Importantly, this doesn’t mean your entire super balance is suddenly subject to an extra 15% tax.
Broadly, the additional tax applies to a proportion of your super earnings relating to the amount of your total super balance above $3 million.
There is also a separate threshold for balances over $10 million, where an additional rate can apply.
Is the $3 million per person or per SMSF?
It’s per person, not per SMSF.
For example, if a couple has $4 million in their SMSF and each member has a balance of around $2 million, the SMSF having $4 million in total doesn’t mean each person has exceeded the $3 million threshold.
The rules look at each person’s total super balance.
They also look beyond your SMSF. If you have money in an SMSF as well as another super fund, those super interests can be relevant when working out your total super balance.
What if my balance is nowhere near $3 million?
For most people, there is nothing to panic about.
If your total super balance is well below $3 million, Division 296 generally won’t apply to you.
If your balance is getting close to the threshold, we can assist with understanding your reported super balances and the taxation and SMSF compliance implications of the new rules.
When does the new tax apply?
The first year of Division 296 is the 2026–27 financial year.
For that year, your total super balance at 30 June 2027 will be relevant in determining whether you are above the $3 million threshold.
If Division 296 applies, the ATO will calculate the tax after the relevant information has been reported and issue an assessment.
The simple takeaway
Total super balance under $3 million? Division 296 generally won’t apply to you.
Around or above $3 million? The new rules may apply and there may be additional tax to calculate.
At Freedom Financial Solutions, we are accountants and SMSF administrators. We can assist with understanding your reported super balances and the accounting, taxation and SMSF compliance implications of Division 296.
We don’t provide financial product advice, including advice about whether you should change your investments, contributions or superannuation strategy.
The information in this article is general information only and is provided for educational purposes. It is not financial product advice and should not be relied upon as a recommendation to establish an SMSF, change your superannuation arrangements or acquire, dispose of or hold any particular investment. Freedom Financial Solutions does not provide financial product advice. Taxation and superannuation laws can be complex and their application depends on individual circumstances. You should obtain appropriate professional advice before acting.