If your super balance is over $3 million, the “we’ll wait and see” phase is over.
Division 296 is now law. (we wrote another article explaining it here)
It applies from 1 July 2026, and the ATO has already published guidance confirming the new rules are in force.
👉 Basically, people with a total super balance above $3 million will face an extra 15% tax on the proportion of earnings linked to the part of their balance above that threshold.
There is also an extra tier above $10 million.
The good news is the final version is not the original fever dream everyone was arguing about. The 2026 law removed the old unrealised gains model, added a second tier above $10 million, and indexed the $3 million and $10 million thresholds to CPI.
That means planning now is less about panic and more about being organised. Which is not as exciting, but usually much better for your wallet.
Division 296 is not a tax on your whole super balance.
It is an extra tax on the earnings attributable to the part of your balance above $3 million. From the ATO’s published guidance, tax concessions from 1 July 2026 will be reduced for individuals whose total super balance exceeds the large super balance threshold, currently set at $3 million for 2026–27.
So if you are over the line, the planning question is not “is all my super suddenly taxed differently?”
It is “how exposed am I above the threshold, and what do I want my money doing from here?”
Big difference.
This is the first job. Before making any grand strategic moves, get clear on:
That sounds obvious, but plenty of people are still working off rough numbers, old valuations or a vague sense that “it’s probably around there somewhere”.
Not ideal when the line is now very real.
For people just above $3 million, the planning may be modest. For people well above it, this becomes a much bigger strategic conversation.
This is the big one.
Super is still tax-effective. Division 296 does not make super bad. It just makes the tax gap narrower once balances get large enough. The practical question is whether every extra dollar above $3 million still belongs in that environment, or whether future wealth accumulation is better held elsewhere depending on your broader tax position, estate plans, asset protection needs and cash flow goals.
That might mean reviewing whether future investments should sit in:
Not because super is broken. Just because once you are above $3 million, the old answer of “jam as much in there as possible” is no longer the automatic winner.
This matters even more for SMSFs holding:
The ATO has confirmed it will administer Division 296 using reported balances and thresholds, which means valuation quality and year-end reporting discipline are going to matter a lot more.
If your SMSF asset values are a bit “that’ll do”, this is a good time to retire that approach.
Not everything needs a gold-plated valuation every five minutes. But the days of casual optimism and a number that “feels about right” are looking less charming.
One of the biggest changes from the original proposal is that the final law does not use the old unrealised gains model. The Parliamentary Library says the final 2026 version removed the proposal to tax notional capital gains and losses.
That is a major improvement, but it does not mean realised gains stop mattering.
If you are already over $3 million, then large realised gains inside super may now create a bigger tax bill than they would have before. That does not mean “never sell anything”. It means timing, sequencing and asset location matter more.
For example:
This is where proper projections start to earn their keep.
If you are already over $3 million, blindly making further non-concessional contributions because “super is low tax” starts to look a bit lazy.
Future concessional contributions may still make sense depending on your income, deductions, age and business structure. But the answer is no longer automatic. The real question is whether adding more to super improves your overall position once Division 296 is part of the picture.
For some people, the answer will still be "yes".
For others, it will be “yes, but only up to a point”.
For others again, it will be “please stop throwing extra money into the pool you’re already trying to climb out of”.
If you are retired or approaching retirement, this is a good time to revisit:
That does not mean rushing to strip money out of super for the sake of it. Super still has important tax and estate planning benefits. But where balances are very high, drawing capital strategically may become more attractive than simply leaving everything in place and hoping the rules develop a softer personality.
They usually don’t.
Division 296 is assessed at the individual level through total super balance, not at the fund level in a simple one-size-fits-all sense. The ATO guidance focuses on the individual’s total super balance above the threshold.
That means planning should look across the couple or family group.
This is where a lot of people miss the point. They focus on the fund, when the real issue is the member.
This is not the glamorous part, but it matters.
If the ATO is going to administer this based on reported balances and earnings, then accurate reporting becomes part of the strategy.
For SMSFs especially, that means:
Dave has had a good innings. 😎
A few things are worth avoiding.
It isn’t. Division 296 trims the concession for very large balances. It does not turn super into a tax wasteland.
You can easily fix one issue and create three new ones in personal tax, asset protection, estate planning or family cash flow.
A lot of people are still arguing against the original version of the proposal. That is not the final law. The unrealised gains model was removed. The thresholds are indexed. The start date is 1 July 2026.
This is one of those jobs that becomes much more painful once it is urgent.
If your super is over $3 million, the smart move now is not to do something dramatic.
It is to do something deliberate.
Work out how far above the threshold you are. Review whether future wealth should still be built inside super.
Stress test asset location. Tighten up valuations and reporting. Revisit contribution and withdrawal strategy.
And look at the family group properly, not just one account in isolation.
Because Division 296 is no longer one of those policy ideas people yell about on the internet for a few months before it disappears.
It is law. It starts 1 July 2026. And if your balance is over the line, planning now will almost certainly be cheaper than winging it later.
– 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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