The $3 Million Super Tax (Division 296): What SMSF Trustees Need to Know
The new tax on super balances above $3 million, known as Division 296, applies from 1 July 2026. If you or your spouse have a large super balance, particularly in an SMSF, it's worth understanding how it works and what it could mean for your planning.
Here's an overview of the key points as we understand them at November 2026. ATO guidance on the detail is still developing, so treat this as a starting point rather than the final word.
What is Division 296?
Division 296 is an additional tax on the earnings attributable to the part of a person's total super balance above $3 million. It sits on top of the normal 15% tax paid inside super.
The legislation passed Parliament in early 2026 after significant changes from the original proposal. The most important change: the final version taxes realised earnings, not unrealised gains on assets that haven't been sold.
The key numbers
$3 million threshold. An extra 15% applies to the share of earnings linked to the balance above $3 million.
$10 million threshold. A further 10% applies to the share of earnings linked to the balance above $10 million.
Indexation. Both thresholds are indexed over time, rather than being fixed forever.
Start date. The tax applies from 1 July 2026, with the first assessments relating to the 2026-27 financial year.
How it's calculated (simplified)
The tax is worked out per person, based on their total super balance across all funds, not per fund. In broad terms:
Work out what proportion of your total super balance sits above $3 million.
Apply that proportion to your super earnings for the year.
Apply the additional tax rate to that amount.
A simplified illustration: if your total super balance is $4 million, then $1 million (25%) is above the threshold. If your fund's earnings attributable to you were $200,000, then 25% of that, or $50,000, would be subject to the extra 15%, giving additional tax of about $7,500.
The actual calculation includes further detail and adjustments, so your own figures may differ. For the first year (2026-27), the balance used is based on the total super balance at 30 June 2027. From 2027-28, the higher of the opening and closing balance for the year is used.
Who pays it, and how?
The ATO assesses the tax on the individual, not the fund. You can generally choose to pay it personally or elect to have it released from your super. Having cash available, either personally or in the fund, matters when the assessment arrives.
Why it matters for SMSFs
SMSF members are more likely than average to have larger balances, and SMSFs often hold assets with significant built-up gains, such as long-held shares or business premises. A few points SMSF trustees may want to review with their adviser and accountant:
Cost base reset. Commentary on the final law indicates SMSFs may have an option to reset the cost base of assets to market value at 30 June 2026, which could reduce the gains counted for Division 296 when those assets are later sold. Whether this is worthwhile depends on the fund's assets and circumstances.
Timing of asset sales. Because the tax applies to realised earnings, when you sell an asset may affect the outcome.
Balances between spouses. The threshold applies per person, so how super is split between members may matter.
Liquidity. Funds holding mostly property or other illiquid assets need a plan to meet the tax if members choose to pay it from super.
Whether super is still the right home for every dollar. For many people super remains tax-effective even with the extra tax, but it's worth reviewing how wealth is spread across super, personal names, trusts and companies.
What to do now
If your total super balance is approaching or above $3 million, or is likely to be by 30 June 2027, now is a good time to:
confirm your total super balance across all funds
understand which fund assets carry large unrealised gains
talk with your adviser and accountant about any decisions that needed to be considered around 30 June 2026, and what still can be considered now
check that your fund has enough liquidity and that your investment strategy still fits.
We help Brisbane clients review their SMSF and broader structure in light of changes like this. Find out more about our SMSF advice, read our guide to setting up an SMSF, or book a free first meeting.
Free download: check your own fund with our 20-point SMSF Health Check.
General advice warning: This article is general information only and does not take into account your objectives, financial situation or needs. It is not tax advice. Consider whether it is appropriate for you and obtain personal financial and tax advice before acting on it. Information reflects our understanding as at November 2026 and may change as ATO guidance develops. Jonas Wealth Management is a trading name of TTJ Capital Pty Ltd (ABN 74 648 477 221). Tyson Jonas is an Authorised Representative (No. 1252754) of Bluewater Financial Pty Ltd, AFSL 411846.
Comments