Then another tweak. Then a rethink. Then a fresh draft. Then everyone had another lie down.
Now we’re done.
The laws were assented to on 13 March 2026 and Division 296 applies from the 2026–27 income year, which means from 1 July 2026.
In other words, this is no longer a maybe, a proposal, or apolitical thought bubble floating around Canberra.
It is law. 🔒
Here’s the practical top line.
If your super balance is more than $3 million, Division 296 may mean an extra 15% tax on the earnings linked to the amount above that line. Not your whole super balance. Just the part over $3 million.
If your balance is more than $10 million, the tax gets steeper again for the portion above that second threshold.
The big relief is that the final law is not the original version that had everyone reaching for the aspirin. The Government dropped the idea of taxing gains on assets that had not even been sold yet, which was where a lot of the drama came from. Instead, the final rules use a real earnings approach.
They also fixed another major gripe: the $3 million and $10 million thresholds will now rise with inflation over time, rather than sitting there forever like a trap waiting for more people to wander into it.
This is where the story gets interesting, or at least as interesting as super tax can get without everybody suddenly becoming very outdoorsy. 🏃➡️
The 2023 version copped plenty of criticism for two main reasons:
First, the $3 million threshold was not going to rise over time, which meant more people could eventually get caught just because of inflation.
Second, it proposed taxing gains on assets that had gone up in value even if they had not been sold yet. That quickly became known as a tax on unrealised gains, and it was the part most people pushed back on.
The final 2026 version changed direction in three big ways:
So after all the noise, the final version is not the same beast people were arguing about back in 2023.
Same broad objective, different plumbing.
Honestly, fair question.
The broad policy idea stayed pretty consistent: reduce the tax concessions available to people with very large super balances.
The Government’s rationale was that super concessions should be better targeted and more sustainable, and the Parliamentary Library notes the measure is aimed at people with balances above $3 million, with an additional hit above $10million.
But the details mattered. A lot.
Because saying “we’re targeting very large balances” lands one way.
Saying “we might tax unrealised gains and not index the threshold” lands another.
That’s when the policy discussion stopped sounding like retirement policy and started sounding like a group assignment where nobody read the brief the same way.
For most Australians, not much.
The measure is targeted at people with very large super balances, and the ATO is already treating it as law applying from 1 July 2026.
For people with balances well north of $3 million, though, this is now firmly in planning territory.
Not panic. Not dramatic LinkedIn-post territory.
Just proper planning.
The key practical takeaway is that the final law is less extreme than the version many people were worried about, but it is also definitely happening. So the old strategy of saying “we’ll wait and see” has officially expired.
It had a good run.
Division 296 has finally crossed the line.
After multiple drafts, repeated arguments, plenty of industry pushback and enough changes to make everyone re-read the fine print several times, the Government has landed on a version that is narrower, more structured and a fair bit different from the original proposal.
So the headline is simple:
Yes, it’s law.
Yes, it starts from 1 July 2026.
And no, the final version is not the old unrealised gains model everyone was yelling about.
If you're super balance is above $3m, check out our recent article which tells you how to plan as we approach the 1 July 26 start date.
– The team at PAL (making accounting slightly less boring since way back when)
Disclaimer: This article is here to give you general info only, not professional advice specific to your unique situation. While efforts are made to ensure accuracy, the content may change over time. We can’t take responsibility for any decisions based on the contents of this article, so be sure to chat with your accountant or advisor first!
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