From 1 July 2025, the Australian Government will implement a new tax measure – the Division 296 tax – that directly impacts individuals with superannuation balances exceeding $3 million. This measure is part of the Government’s strategy to enhance the equity and sustainability of Australia’s superannuation system.
What Is Division 296 Tax?
Division 296 tax is a new additional tax of 15% on superannuation earnings attributed to the portion of an individual’s total super balance that exceeds $3 million. This is on top of the existing 15% concessional tax rate that generally applies to earnings within superannuation funds.
This means affected individuals will face an effective tax rate of up to 30% on earnings related to balances above the $3 million threshold.
Who Is Affected?
This tax applies to individuals who have a total superannuation balance exceeding $3 million at the end of a financial year, commencing from 30 June 2026. The ATO will assess this annually.
How Is the Tax Calculated?
Division 296 tax is calculated on the earnings attributed to the proportion of the balance over $3 million, using a specific formula defined by the ATO:
- Superannuation Earnings = (super closing balance + current year withdrawals – current year net contributions) – super opening balance
- Proportion over cap = (super closing balance – $3 m threshold) ÷ closing balance
- Division 296 tax = 15 % × Superannuation Earnings × Proportion
How Walker Wayland NSW Can Help
If you or your clients are likely to be affected by Division 296 tax, proactive planning is key. Our experienced superannuation and tax advisers can assist with:
- Forecasting exposure to the tax
- Assessing tax efficiency of your investments
- Reviewing SMSF strategies and structuring options
- Navigating payment elections and reporting obligations
Let’s Talk
If you’d like to understand how this change may impact your superannuation and broader wealth strategy, reach out to your Walker Wayland NSW adviser or contact us via our contact page.
