Division 296 Tax Calculator — $3M Super Cap 2026
Estimate the additional 15% tax on super earnings attributable to balances above $3 million under Division 296. Includes unrealised capital gains in the earnings calculation, as proposed under the better-targeted superannuation concessions law.
| Adjusted earnings (incl. unrealised gains) | — |
| Excess balance above $3M | — |
| Proportion of TSB above cap | — |
| Earnings × proportion = taxable earnings | — |
| Div 296 tax (15% × taxable earnings) | — |
What Is Division 296 Tax?
Division 296 is the Australian Government's "better-targeted superannuation concessions" measure that imposes an additional 15% tax on earnings attributable to total super balances (TSB) above a $3 million threshold. Combined with the existing 15% earnings tax inside super, members with balances over $3M effectively pay 30% tax on the proportion of earnings above the cap. Critically, "earnings" includes unrealised capital gains — meaning paper gains on assets the fund has not sold are taxable each year (source: Australian Taxation Office, Treasury).
Status as of 2026: The legislation passed first reading and was reintroduced in 2025-2026 with a proposed 1 July 2026 start date. The $3M threshold is not indexed in the current draft, meaning bracket creep over time will pull more members into the regime. Verify current legal status with the ATO before relying on these estimates for 2026-27 tax planning.
The Formula — Proportional Earnings Method
The calculation has three steps. First, "earnings" are computed as: TSB at end of FY − TSB at start of FY + withdrawals − net contributions. This includes unrealised gains because TSB reflects market-value accounting. Second, the proportion of TSB above the $3M cap is determined: (closing TSB − $3M) / closing TSB. Third, the Div 296 tax = earnings × proportion × 15%. Worked example: opening TSB $3.5M, closing $3.85M, contributions $25K, withdrawals $0. Earnings = $3.85M − $3.5M − $25K = $325K. Proportion above cap = ($3.85M − $3M) / $3.85M = 22.08%. Taxable earnings = $325K × 22.08% = $71,760. Div 296 tax = $71,760 × 15% = $10,764.
Why Unrealised Gains Are Controversial
Most countries tax capital gains only on realisation (when the asset is sold). Div 296 taxes paper gains annually, which can create cash-flow problems for members holding illiquid assets like SMSF property or private company shares. If a $3M property in an SMSF rises to $4M in a year, the member pays Div 296 on the $1M paper gain — but cannot sell a piece of the property to fund the tax. Loss carry-back is available — losses in a future year reduce taxable earnings — but liquidity stress in growth years is the central criticism (source: ATO Div 296 guidance).
Strategy — How to Manage Div 296 Exposure
(1) Withdraw above-cap balances before 30 June if eligible (preservation age met) — reduces closing TSB. (2) Spousal contribution-splitting moves balance to a lower-balance spouse, keeping both below $3M. (3) Asset-liability matching in SMSFs — hold liquid assets (cash, bonds) sufficient to cover potential Div 296 tax in any growth year. (4) Re-evaluate SMSF property — illiquid leveraged property is the highest-risk asset class for liquidity stress. (5) Pension phase — moving balance into pension drawdown reduces accumulation TSB, potentially below the cap.
For other Australian super tools, see our Division 293 calculator, concessional vs non-concessional, super co-contribution, and superannuation tax calculator.
Last updated April 2026. Estimates only — Div 296 legislation is being finalised; verify current status with the ATO. Sources: Australian Taxation Office, Australian Treasury.