Key takeaways
- Applies from the 2026-27 financial year onwards, to total super balances above the large super balance threshold of $3 million for 2026-27.
- The balance tested for 2026-27 is your balance at 30 June 2027, and from 2027-28 it is the higher of your balances at the start and end of the year.
- An additional 15% on the proportion of earnings relating to the balance above $3 million, plus a further 10% on the proportion above the very large super balance threshold of $10 million.
- Not the same as Division 293, which is an extra 15% on concessional contributions once income plus contributions exceeds $250,000.
- No lodgment from you. The ATO calculates it from what your funds report and issues a notice of assessment.
- First assessments come later in 2027-28. Nothing lands this year.
- It does not touch your PAYG withholding or your take-home pay.
Division 293 vs Division 296
These are separate taxes with separate triggers. The similarity is the number and the fact that both add tax to superannuation for higher earners. Everything else differs.
| Division 293 | Division 296 | |
|---|---|---|
| Triggered by | Income plus concessional contributions over $250,000 | Total super balance over $3 million (the LSBT) |
| What is taxed | Your concessional contributions | A proportion of your super earnings |
| Rate | Extra 15% | Extra 15% above the LSBT, plus a further 10% above the VLSBT |
| Threshold | $250,000 | $3 million and $10 million for 2026-27 |
| Status | Long standing | New, first applies 2026-27 |
| First assessments | Existing annual cycle | Later in 2027-28 |
The practical consequence: a surgeon on $400,000 with $600,000 in super pays Division 293 and not Division 296. A retired business owner with no salary and $5 million in super pays Division 296 and not Division 293. Someone can be caught by both, and they are assessed separately.
If the one you are dealing with is Division 293, the Division 293 calculator works out the liability, and adjusted taxable income explains the income test it uses, which is not your taxable income.
The two thresholds and the layered rates
The ATO uses its own vocabulary here, and it is worth learning because the shorthand in circulation is imprecise.
| Term | Means | 2026-27 value |
|---|---|---|
| TSB | Total superannuation balance | Your figure |
| LSBT | Large super balance threshold | $3 million |
| VLSBT | Very large super balance threshold | $10 million |
The ATO's own construction is that individuals with a TSB above the LSBT are subject to an additional 15% tax on the proportion of earnings relating to their TSB exceeding the LSBT, and individuals with a TSB above the VLSBT are subject to an additional 10% tax on the proportion of earnings relating to their TSB exceeding the VLSBT.
A lot of coverage states a flat additional 25% above $10 million. The total lands in the same place, because the 10% layers on top of the 15% that already applies. But the ATO describes two separate additional taxes with two separate thresholds, and the layering is what makes the structure work. Quoting a bare 25% rate states something the ATO does not say in that form, and it obscures that the 15% keeps applying to the slice between $3 million and $10 million.
The formal name for the measure is Better Targeted Super Concessions. The ATO does not lead with "$3 million super tax", which is the phrasing most commentary uses.
How the ATO says it will work
There is no return to lodge, and nothing to elect until an assessment arrives. In the ATO's words: when your fund reports your account balance to us for the 2026-27 financial year, we will calculate your TSB, and if it exceeds the LSBT or VLSBT we will use your relevant super earnings, reported by your funds, to calculate your Division 296 tax and issue you with a notice of assessment.
One structural change sits underneath that and is easy to miss: the ATO states that the way it calculates total super balances is also changing as a result of the Division 296 legislation. If you have been tracking your TSB against the $3 million threshold using the current method, the figure the ATO arrives at may not be the one you have been watching.
When anything actually happens
| When | What |
|---|---|
| 13 March 2026 | Royal Assent for the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 and its Imposition Act, Acts No. 8 and No. 9 of 2026 on the Federal Register of Legislation |
| 1 July 2026 | Applies from the 2026-27 financial year onwards |
| During 2027-28 | Funds calculate and report members' relevant super earnings for 2026-27, with ATO requests starting in November 2027 for defined benefit funds and April 2028 for other APRA-regulated funds. The ATO works out each total super balance, total super earnings and the tax. |
| Later in 2027-28 | The ATO begins issuing Division 296 notices of assessment |
So the tax is live now in the sense that the 2026-27 year is being measured, and dormant in the sense that nobody receives anything until the following year.
What the detailed ATO pages say
An earlier version of this article listed the calculation method, defined benefit treatment, excluded interests, payment and indexation as unpublished. They were not. The ATO's detailed pages on each were last updated on 29 June 2026, before this article went up, and we had not read them. We have now, and the short version is below.
- The calculation. The ATO takes the share of your balance above each threshold, as a percentage rounded to 2 decimal places, and multiplies it by your total super earnings. 15% applies to the share above $3 million and a further 10% to the share above $10 million. The Division 296 calculator runs that formula and reproduces the ATO's worked examples.
- Defined benefit interests. Earnings are measured from the change in the interest's value, and the tax on them is deferred until an end benefit is paid from that interest.
- Excluded interests. Constitutionally protected funds of state higher level office holders, Judges' Pensions Act interests and foreign super funds, among others, have their earnings counted as nil but still count in your balance.
- Paying. Payment is due 84 days after the notice of assessment. You can elect within 60 days to release the money from super, and that does not move the due date. The tax is not deductible.
- Indexation. Both thresholds are indexed to CPI, $3 million in $150,000 increments and $10 million in $500,000 increments. No 2027-28 figure has been published.
Still not published: any ATO figure for how many people are affected or the revenue raised, and the law companion ruling the ATO says it is drafting.
The obvious URL for this topic, ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/division-296-tax, returns a 404. The live hub sits several levels deeper, under growing and keeping track of your super, then caps limits and tax on super contributions. A dead link there does not mean the guidance is gone.
On the contributions side, the general concessional cap for 2026-27 is $32,500, and how salary sacrifice interacts with it is worked through in the salary sacrifice calculator. Employer contributions themselves are covered by the super guarantee calculator at the 2026-27 rate of 12.00%.
Frequently asked questions
What is the difference between Division 293 and Division 296?
What is Division 296 tax?
What happens above $10 million?
When will I get a Division 296 assessment?
Do I have to do anything now?
Is the $3 million threshold indexed?
Does Division 296 affect my take-home pay?
Sources
The bulletin and the hub were fetched 2 August 2026. The five detailed ATO pages and both Acts on the Federal Register were fetched 19 September 2026.
- Be ready for new tax on large and very large super balances (QC107743, published 7 July 2026). The LSBT and VLSBT thresholds, the layered 15% and 10% rates, the assessment mechanism and the 2027-28 assessment timing.
- Division 296 tax (QC107621, modified 29 June 2026). The ATO hub, and the parent of the five detailed pages below.
- How Division 296 tax is calculated (QC107623, last updated 29 June 2026). The reference amount, the rounded percentage formulas, the ATO worked examples, and the rule that funds calculate and report relevant super earnings.
- Division 296 tax on large super balances (QC107622, last updated 29 June 2026). CPI indexation in $150,000 and $500,000 increments, the exceptions and the assessment timing.
- Division 296 tax for defined benefit interests and other prescribed interests (QC107624, last updated 29 June 2026). How defined benefit earnings are measured, and deferral of the tax on them.
- Paying Division 296 tax (QC107625, last updated 29 June 2026). The 84-day due date and the 60-day election to release money from super.
- Division 296 tax excluded interests (QC107626, last updated 29 June 2026). Which interests have their earnings counted as nil while still counting in the balance.
- Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 (No. 8, 2026, C2026A00008). Federal Register of Legislation. Assent 13 March 2026. Inserts Division 296 into the Income Tax Assessment Act 1997.
- Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 (No. 9, 2026, C2026A00009). Federal Register of Legislation. Assent 13 March 2026. Section 5 sets the 15% and 10% rates.
- Division 293 threshold and rate are this site's verified engine constants ($250,000 and 15%), used on the Division 293 calculator.
The 13 March 2026 Royal Assent date is the assent date the Federal Register of Legislation records for both Acts.
Related
Division 293 Calculator
The other super tax, at $250,000 of income
Open →Salary Sacrifice Calculator
Concessional cap and the tax saved
Open →Division 296 Calculator
The tax on earnings of super balances above $3 million
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Every rate change, deadline and ruling we have covered
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