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What is Division 296 tax?
Division 296 tax is an additional tax on superannuation and pension earnings where your balance is over $3 million.
How does it work?
From 1 July 2026 if your Total Super Balance exceeds $3 million then an additional tax will be applied to your superannuation earnings proportional to the amount above the caps.
The additional tax is applicable in both superannuation and pension phase.
How do I know if I have to pay Division 296 tax and what do I need to do?
The ATO will work out if you need to pay Division 296 tax based on data they receive from your super fund(s). They will issue you with a notice of assessment stating the amount of tax payable and provide an authority to enable your super fund to release the money. You can, however, pay the tax from your non-super savings.
Note: Different rules apply for calculating Division 296 tax if you are a member of a defined benefit fund – see the Australian Taxation Office for more information.
Case study
Helen has a total super balance of $3.4 million and investment earnings of $170,000 for the year.
Only the portion of earnings linked to the $400,000 above $3 million attracts Division 296 tax.
Earnings linked to the first $3 million continue to be taxed at the standard 15% rate.
$20,000 of the earnings will be subject to Division 296 tax at 15%. Helen can opt to pay the $3,000 either through her super or personally.
Total super balance |
Additional Division 296 tax | Total effective tax on earnings |
|---|---|---|
Up to $3 million |
Nil |
15% |
| $3 million - $10 million | 15% |
Up to 30% |
| Above $10 million | 10% | Up to 40% |
Case study
David has a total pension balance of $12 million and investment earnings of $720,000.
Earnings are split across three bands: up to $3 million where existing fund tax rules continue to apply; $3 million – $10 million where an additional 15% Division 296 tax applies; and amounts above $10 million where a further additional 10% Division 296 tax applies.
Only the earnings linked to the highest balance tier attract the highest tax rate.
As David is in pension phase no standard taxation applies on his earnings. His earnings will only be subject to Division 296.
David will have $420,000 of earnings subject to 15% tax and $120,000 subject to 25% tax.
David can opt to pay the $93,000 tax personally or from his pension assets.
Total super balance |
Additional Division 296 tax | Earnings Proportioned | Division 296 tax |
|---|---|---|---|
Up to $3 million |
Nil |
$180,000 | $0 |
| $3 million - $10 million | 15% |
$420,000 | $63,000 |
| Above $10 million | 10% | $120,000 |
$30,000 |
| Total earnings: $720,000 | Total Division 296 tax: $93,000 |
For more information, please visit Division 296 tax | Australian Taxation Office opens in new window
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General advice and information only
Any advice and information on this website is general only, and has been prepared without taking into account your particular circumstances and needs. Before acting on any advice on this website you should assess or seek advice on whether it is appropriate for your needs, financial situation and investment objectives.
Tax disclaimer
Any general tax information on this website is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.
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