Division 296 Tax Changes: What The $3 Million Super Tax Update Means For You
- Future Accounting
- Oct 13
- 3 min read
Written by: Catherine Neville
The latest Division 296 tax changes reveal big wins for super fund members
Division 296 tax changes: Government revises proposed $3 million super tax
The government has softened its proposed $3 million super tax with new Division 296 changes, including indexed thresholds, revised tax rates, and a delayed start to July 2026. Learn what this means for your super and how we can help you prepare for the changes to stay ahead of these changes.
Treasurer Jim Chalmers has announced significant changes to the proposed $3 million super tax under Division 296. The new plan introduces indexed thresholds, separate tax rates for high balances, and a delayed start to 2026. Find out how these updates could affect your SMSF and why it’s the perfect time to review your strategy.
For full government details, view the official Treasury release here.
Key Division 296 changes announced
Treasurer Jim Chalmers has unveiled several major superannuation tax reforms in a press conference this afternoon and the government has effectively watered down the original proposal.
The key updates include:
Realised earnings only: Division 296 tax will apply only to future realised earnings, not unrealised gains.
Indexed $3 million threshold: The $3 million threshold will be indexed, with super balances between $3 million and $10 million taxed at 30%.
New $10 million threshold: A second threshold at $10 million will also be indexed, with earnings above this limit taxed at 40%.
Delayed implementation: The start date for the new tax has been pushed back by one year to 1 July 2026.
Additional announcements
From 1 July 2027, the government will increase the low-income superannuation tax offset (LISTO) from $500 up to $810 and raise the eligibility threshold from $37,000 to $45,000.
According to Treasury, these changes aim to ensure the LISTO continues to support low-income workers by providing fairer tax concessions on super contributions — helping boost income in retirement.
What this means for SMSF members
These revisions signal that the government has listened to the superannuation industry and is open to further consultation on how the Division 296 tax will be implemented.
The updates are a positive step for all superannuation members plus, SMSF members with higher balances, providing more clarity and fairness in how earnings will be calculated and taxed going forward.
Now is the perfect time to review your SMSF strategy and investment approach to ensure you are well positioned ahead of the anticipated 2026 implementation date.
How we can help
Review your current fund structure and investment strategy.
Model the potential tax implications under the revised Division 296 rules.
Work with your financial planner to optimise your overall retirement plan and any required investment strategies.
Contact our team today to arrange a consultation and make sure your SMSF is ready for these upcoming changes.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
