May 23, 2025
DIVISION 296: WHAT THE PROPOSED SUPER TAX MEANS FOR BALANCES OVER $3 MILLION
From 1 July 2025, individuals with superannuation balances exceeding $3 million may be subject to an additional tax under proposed changes known as Division 296. If the legislation is passed by the Senate, an extra 15% tax would apply to the earnings attributed to the portion of a person’s Total Superannuation Balance (TSB) above $3 million. This would be in addition to the existing 15% tax on concessional earnings already paid within superannuation funds. For high-balance super holders, this could result in a combined tax rate of up to 30% on some of their superannuation earnings. The proposed tax could significantly influence long-term retirement planning—especially for individuals and self-managed super funds (SMSFs).
HOW DOES DIVISION 296 WORK?
Division 296 introduces a new 15% tax on earnings linked to the portion of a super balance above $3 million. What sets it apart is how earnings are calculated: the measure includes both realised and unrealised gains. In other words, you could be taxed on increases in asset values even if those assets haven’t been sold.
To help you understand how this tax may affect you, we’ve compiled a list of frequently asked questions covering key topics such as eligibility, calculation methods, reporting obligations, and payment options. We’ve also provided a Tax Calculator To help you work out what the implications could be for you.
