- Division 296 — an extra 15% tax on realised earnings attributable to balances over $3 million (and an extra 25% above $10 million) — starts 1 July 2026.
- Indexed contribution caps rise on 1 July 2026: concessional from $30,000 to $32,500, non-concessional from $120,000 to $130,000 (bring-forward to $390,000), Transfer Balance Cap from $1.9M to $2.1M.
- Total Super Balance threshold for non-concessional contributions rises from $2.0M to $2.1M on 1 July 2026, with bring-forward bands also shifting.
Division 296: the new tax on balances over $3 million
Division 296 is the most significant change to superannuation taxation since the introduction of the Transfer Balance Cap in 2017. After more than two years of debate and substantial last-minute amendments, the two bills implementing it passed Parliament on 10 March 2026 and take effect from the 2026-27 financial year.
How it works (and what changed from the original bill)
For super accounts with a Total Super Balance above $3 million on 30 June, an additional tax applies to the proportion of earnings attributable to the balance above the threshold. There are two tiers:
- Balance between $3 million and $10 million — an extra 15% on the attributable earnings, taking the total to 30% (the fund's existing 15% plus this extra 15%).
- Balance above $10 million — an extra 25% on the attributable earnings, so 40% in total.
Two amendments in the final law matter enormously — and a lot of older explainers (including ours, until this update) still describe the original version:
- Unrealised gains are no longer taxed. The original 2023 bill would have taxed the change in your balance including paper gains on assets you hadn't sold. That was dropped. Division 296 now applies only to realised earnings — actual income and realised capital gains, aligned to existing tax concepts.
- The thresholds are now indexed. Both the $3 million and $10 million thresholds index to inflation — in $150,000 and $500,000 steps respectively — so they keep pace instead of catching more people through bracket creep.
The tax applies only to the portion of earnings above each threshold, not your whole balance. It commences on 1 July 2026, the first test date is 30 June 2027, and the first assessments are issued after that. For the full mechanics, worked examples, and planning strategies, see our dedicated Division 296 guide.
Who's affected
Treasury estimates approximately 80,000 Australians will be affected by Division 296 in its first year. For the average super-fund member (median balance around $50,000–$150,000 depending on age), Division 296 has no impact whatsoever. The change is targeted squarely at very-high-balance accumulation accounts, including most SMSFs holding business real estate or large equity portfolios.
What to do if you're approaching the threshold
If you're near or above $3M, the first balance test is 30 June 2027 — so there is genuine planning time. Common strategies under consideration:
- Withdraw and recontribute below the cap if you're aged 60+ and have met a condition of release, and the withdrawal won't push you past the contribution caps.
- Pause concessional contributions for high-balance members so the balance doesn't grow further into Division 296 territory.
- Spouse-splitting remains available — concessional contributions can be split with a lower-balance spouse to keep both accounts under the threshold.
- SMSF restructuring — for SMSF members with illiquid assets (business real property), the Division 296 cash-payment timing rules create real liquidity planning challenges. Discuss with an SMSF specialist.
This is general information, not personal advice. The interaction of Division 296 with your wider financial position is complex and almost always benefits from a sit-down with a licensed financial adviser well before the first 30 June 2027 test date.
Contribution caps lift from 1 July 2026
Super contribution caps are indexed to Average Weekly Ordinary Time Earnings (AWOTE), not Budget decisions. The Budget formally confirmed the indexed values for FY 2026-27:
| Cap | FY 2025-26 | FY 2026-27 (from 1 July 2026) |
|---|---|---|
| Concessional contribution cap | $30,000 | $32,500 |
| Non-concessional contribution cap | $120,000 | $130,000 |
| Non-concessional bring-forward (3 years) | $360,000 | $390,000 |
| Transfer Balance Cap (general) | $1,900,000 | $2,100,000 |
| Total Super Balance threshold for non-concessional | $2,000,000 | $2,100,000 |
The full contribution caps guide walks through the rules for each cap, the bring-forward eligibility tapering for balances near the threshold, and the excess-contribution tax consequences.
What didn't change in the Budget
- Super Guarantee (SG) rate stays at 12% — the legislated phase-up to 12% was completed in 2025.
- Stage 3 tax cuts remain in place: 30% bracket from $45,001 to $135,000, 37% to $190,000, then 45%. These were re-tweaked in the May 2024 Budget but unchanged in May 2026.
- Preservation age stays at 60 for everyone born on or after 1 July 1964.
- Low Income Super Tax Offset (LISTO) threshold and rules unchanged.
- Government co-contribution income thresholds index up each 1 July (2025-26: $47,488 lower / $62,488 upper) — indexation-driven, not a Budget decision.
Related
- Division 296 explained — the $3M super tax, in full
- Super Contribution Caps 2025-26 and 2026-27
- Payday Super — what it means for your balance
- How Super Is Taxed
- Super contribution cap calculator
Independent superannuation research · about the editor ✓ Fact-checked · updated May 2026
Source: APRA & ATO data