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.
- 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 no election to make. 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 primary legislation, per the ATO Better Targeted Superannuation Concessions Working Group key messages of 19 March 2026 |
| 1 July 2026 | Applies from the 2026-27 financial year onwards |
| During 2027-28 | Funds report 2026-27 balances, the ATO calculates TSB and relevant earnings |
| 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 has not been published yet
The ATO hub has child pages on the calculation method, defined benefit and other prescribed interests, paying the tax, excluded interests, and refunds for former temporary residents. Those are not covered here because they have not been read, and the honest position is to say so rather than infer. Specifically, this page does not tell you:
- how the "proportion of earnings" is actually calculated
- how defined benefit interests are treated
- which interests are excluded
- how the tax is paid, including whether it can be released from the fund
- whether the thresholds are indexed, which the ATO pages do not state
- how many people are affected or how much revenue is raised.
If you are near $3 million, those details decide your actual number and they are worth getting from your adviser or the ATO's own child pages rather than from summaries.
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
ATO pages fetched 2 August 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 for the calculation, defined benefit, payment and excluded interest pages not covered here.
- 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 attributed to the ATO Better Targeted Superannuation Concessions Working Group key messages of 19 March 2026, which was seen in search-result content rather than fetched in full. It is stated here with that attribution rather than as an independently verified date.
Related
Division 293 Calculator
The other super tax, at $250,000 of income
Open →Salary Sacrifice Calculator
Concessional cap and the tax saved
Open →Adjusted Taxable Income
The income test Division 293 actually uses
Open →
Narelle Hartigan is a CPA-qualified tax accountant with over a decade of experience in Australian personal taxation and payroll. She founded PAYG Calculator Australia to make tax withholding easy for every Australian worker to understand.