From 1 July 2026, a new tax known as Division 296 applies to individuals with larger superannuation balances. The tax is designed to reduce some of the tax concessions available through super for people whose total super balance exceeds the large super balance threshold. For the 2026-27 financial year, the large super balance threshold is $3 million and the very large super balance threshold is $10 million.

For most Australians, this change will not apply. However, it is relevant for people with substantial superannuation savings, particularly those with self-managed super funds, large pension balances, business real property inside super, or significant investment growth over time.

The additional tax applies to a portion of super earnings, not the entire super balance. Where a person's total super balance exceeds $3 million, Division 296 tax can apply at an additional rate of 15% on the relevant taxable super earnings. A further 10% can apply to earnings attributable to balances above the $10 million threshold.

Importantly, the tax is assessed to the individual, not directly to the super fund, although in many cases the liability can be paid by withdrawing funds from super. The ATO has indicated that affected individuals will receive a Division 296 tax notice of assessment, and they may be able to elect to release money from super to pay the liability.

For SMSF members, there may be additional reporting and administration requirements. SMSF trustees may need to provide information that helps determine the relevant earnings attributable to members with balances above the threshold.

What should you consider?

If your super balance is approaching or above $3 million, it may be worth reviewing:

• Whether your super remains appropriately structured.
• The mix between accumulation phase, pension phase and personal investments.
• Whether large illiquid assets inside super may create future cash flow issues.
• Estate planning implications.
• The role of spouse balances and contribution splitting.
• Whether an SMSF remains the most suitable structure.

Despite these changes, our view is that super remains one of the most tax-effective retirement savings vehicles available.

Important information

This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. You should obtain and consider the Product Disclosure Statement relating to any product referred to in this presentation before making any decision about whether to acquire the product.

WSC Group (Aust) Pty Ltd is an authorised representative of Count Financial Limited ABN 19 001 974 625, holder of Australian financial services licence number 227232 ("Count"). Count is owned by Count Limited ABN 11 126 990 832 of GPO Box 1453, Sydney NSW 2001. Count Limited is listed on the Australian Stock Exchange. The information on this web page is not financial product advice and is provided for information only.