The Australian Government is progressing with major changes to the superannuation tax framework, introducing Division 296, which targets individuals with high super balances. While the measure is not yet law, the Australian Taxation Office (ATO) confirms it is a government priority, with implementation planned for 1 July 2026.

This measure forms part of the government’s broader goal of ensuring the superannuation system remains sustainable and equitable as account balances grow, while still preserving its role as a vehicle for long-term retirement savings.

Under the proposed legislation, two new thresholds will apply:

  • $3 million: Earnings attributable to balances above this threshold will incur an additional 15% tax, bringing the total tax rate to 30%.
  • $10 million: A second tier will apply a 40% tax rate on earnings above this level.

Both thresholds will be indexed to inflation, helping to maintain fairness over time. The government has also responded to industry feedback by removing the tax on unrealised capital gains. Only realised earnings, such as dividends, interest, and capital gains from sold assets, will be taxed under Division 296.

The ATO will calculate liabilities based on fund-reported data and notify affected individuals, who can choose to pay the tax personally or from their super fund. Negative earnings can be carried forward to offset future liabilities.

These changes are expected to impact approximately 90,000 Australians, primarily those with self-managed super funds (SMSFs).

With implementation still over eight months away, now may be a good time to review your super strategy with your adviser and prepare for the new regime prior to 1 July 2026. Proactive planning can help ensure your fund remains tax-efficient under the new rules and that you’re making the most of available strategies in the lead-up to the changes.

This article first appeared in the Summer 2025/26 issue of HLB Mann Judd Perth’s Client Alert, and was authored by HLB Wealth Financial Adviser Leanne Rowley who can be contacted at: lrowley@hlbwa.com.au

Leanne Rowley (ASIC No. 223142) and HLB Wealth Pty Ltd (ASIC No. 428645) are Authorised Representatives of Paragem Pty Ltd (“Paragem”), ABN 16 108 571 875, AFSL No. 297276.
Disclaimer: The information contained in this article has been provided as general advice only. The contents have been prepared without taking account of your personal objectives, financial situation or needs. Before you make any decision regarding any information, strategies or products mentioned in this article, you should consult your financial adviser to consider whether that is appropriate having regard to your personal objectives, financial situation and needs. Please note that any audit, taxation and accounting services are provided by HLB Mann Judd and are not within the authority of Paragem’s AFSL No. 297276.