A New Tax on Big Super Balances: What You Need to Know
By Tina Zawila
Superannuation remains one of the most tax-effective ways for Australians to build long-term wealth for retirement. However, a new measure known as Division 296 will change how very large super balances are taxed.
In simple terms, Division 296 introduces an additional tax on super earnings for individuals whose total super balance exceeds $3 million (across all funds). The measure is part of the Federal Government’s policy to better target tax concessions within the superannuation system.
From 1 July 2026, earnings attributed to the portion of a person’s super balance above $3 million will be taxed at higher rates:
- 30% on earnings linked to balances between $3 million and $10 million
- 40% on earnings linked to balances above $10 million
Importantly, the higher tax applies only to the earnings on the amount above the threshold — not to the entire super balance. By comparison, super earnings for those with balances under $3 million are generally taxed at 15%.
This tax is assessed to the individual, rather than the super fund. In many cases, the liability can be paid personally or released from the member’s super account. The first assessments are expected to relate to earnings in the 2026–27 financial year, with notices issued from 2027 onwards.
For most Australians, this change will have no immediate impact, as only a relatively small number of people currently have super balances above $3 million. That said, it may be relevant for business owners, professionals, and long-term investors who are building significant retirement savings over time.
At this stage, the key message is don’t make rushed decisions. Superannuation remains an effective retirement savings vehicle, and any changes should be considered as part of your broader financial plan.
This article is general in nature. Before acting, you should consider its appropriateness to your circumstances and seek professional advice. Speak with your accountant, tax agent and/or financial adviser about how Division 296 could apply to you.
The team at UHY Haines Norton CQ Pty Ltd can assist with accounting, tax and financial planning advice. Call 07 4972 1300.
