For years, superannuation has been one of Australia’s most tax-effective wealth-building structures.
But from 1 July 2026, that landscape changes for some Australians.
A new measure known as Division 296 is set to apply additional tax to individuals with larger superannuation balances.
For many business owners, professionals, and self-managed super fund trustees, this may be the first time super strategy and tax planning need to be viewed through a very different lens.
So what exactly is changing — and should you be doing anything now?
What Is Division 296?
Division 296 introduces an additional 15% tax on a portion of superannuation earnings for individuals whose total superannuation balance exceeds $3 million. For balances above $10 million, a higher rate applies. The thresholds are indexed.
This is not a tax on your entire super balance.
And it doesn’t apply simply because your balance reaches $3 million.
Instead, the tax applies to the proportion of earnings attributable to the amount above the threshold.
That distinction matters.
Who Could Be Affected?
This won’t impact most Australians.
But it may affect:
- Business owners who have built significant wealth inside super
- SMSF trustees holding property or larger investment portfolios
- Professionals who have made substantial concessional contributions over many years
- Couples who may individually be approaching higher balances
- Individuals with multiple super accounts across different funds
Even if you’re not there yet, many people in their 40s, 50s, and early 60s may be closer than they realise.
Why SMSF Trustees Should Pay Particular Attention
For SMSFs, this change may require a deeper review.
Especially if your fund holds:
- Commercial property
- Business premises
- Large share portfolios
- Illiquid investments
- Long-held growth assets
The way earnings are calculated — and how those earnings are attributed to individual members — may create planning opportunities, but also additional complexity.
“I’m Under $3 Million, So I Don’t Need to Worry.”
Maybe.
Maybe not.
One of the biggest mistakes we’re seeing is assuming this is only relevant once you’ve crossed the threshold.
In reality, strategic planning often happens before the balance gets there.
Because once your balance is already over the threshold, your options may be more limited.
Questions worth asking now include:
- Are your current contribution strategies still appropriate?
- Are pension and accumulation balances structured efficiently?
- Does your SMSF investment mix still make sense?
- Are both members of a couple positioned effectively?
- Are there estate planning considerations tied to your super strategy?
This Isn’t About Panic. It’s About Planning.
Division 296 doesn’t mean super suddenly becomes a poor investment vehicle.
Far from it.
But it does mean that for higher-balance members, “set and forget” may no longer be enough.
Superannuation strategy, tax planning, business succession, retirement timing, and asset structuring may now need to work more closely together.
Should You Be Reviewing Your Position Now?
If your super balance is approaching $3 million — or you’re not actually sure where your combined balances sit — now is the time to start the conversation.
Not after the first assessment arrives.
At L Jack & Associates, we help business owners, investors, and SMSF trustees understand how legislative changes like Division 296 may affect their broader financial strategy — and what proactive planning may be available before deadlines start to matter.