Division 296 Super Tax Calculator Australia 2026

What Is Division 296 Tax?

Division 296 is an additional 15% tax on superannuation earnings attributable to the portion of a member's Total Super Balance (TSB) that exceeds $3 million. Introduced under the Treasury Laws Amendment (Better Targeted Super Concessions) Act 2023, it effectively doubles the tax rate on super earnings above the $3 million threshold from 15% to 30%. The measure aims to reduce the tax concession available to very high-balance super accounts, which the government considers disproportionate relative to the retirement income objectives of the superannuation system.

The $3 million threshold is not indexed to inflation, wages, or any other measure. Over time, this means more Australians will be caught by Division 296 as super balances grow through contributions and investment returns. The ATO estimates approximately 80,000 members are affected in the first assessment year. The tax applies from 1 July 2025, with the first assessments issued for the 2025-26 financial year. Source: ato.gov.au, treasury.gov.au. Last updated: May 2026.

How Division 296 Tax Is Calculated

The Division 296 formula uses three components. First, calculate total super earnings for the financial year using the formula: Earnings = Closing TSB minus Opening TSB plus Withdrawals minus Contributions. This captures the net investment return within the fund during the year, adjusting for cash flows in and out.

Second, calculate the proportion of the closing balance above $3 million: Proportion = (Closing TSB minus $3,000,000) divided by Closing TSB. This proportion is capped between 0 and 1. Third, multiply: Division 296 Tax = Earnings multiplied by Proportion multiplied by 15%. A critical detail is that unrealised capital gains are included in the earnings calculation. This means you may owe Division 296 tax on paper gains you have not actually received as cash, which has been a major point of contention in public debate.

Strategies to Manage Division 296 Impact

Members approaching the $3 million threshold should consider several strategies. Withdrawing amounts above $3 million before 30 June reduces the closing balance and therefore the taxable proportion. Reducing contributions as the balance nears the threshold limits future growth above the cap. SMSF trustees may review their asset allocation to reduce exposure to volatile assets that create large unrealised gains.

Members with defined benefit pensions face a different calculation method based on notional taxed contributions, which may produce different results than accumulation accounts. Professional financial advice is strongly recommended given the complexity and the potential for unintended consequences from restructuring. The ATO allows Division 296 tax to be paid from personal funds or released from the super fund via an ATO release authority.

Division 296 vs Division 293

Division 293 and Division 296 target different aspects of superannuation tax concessions and can apply simultaneously to the same member. Division 293 targets high-income earners with income above $250,000, imposing an additional 15% tax on concessional contributions. Division 296 targets high-balance members with a TSB above $3 million, imposing an additional 15% tax on a proportion of total earnings.

A member earning $300,000 with a $4 million super balance could face both taxes in the same year: Division 293 on their contributions and Division 296 on earnings above the $3 million proportion. The combined effect means some super earnings are effectively taxed at 30% (standard 15% plus Division 296 15%), while contributions may also face an additional 15% under Division 293, bringing the total contribution tax to 30% as well. Based on 2025-26 ATO and Treasury rules.