Division 296 adds a tax to super earnings above $3 million.
From 1 July 2026, earnings attributed to super balances above $3 million carry an additional tax. The final law is very different from the 2023 bill everyone argued about: realised earnings only, two tiers, indexed thresholds. Drag the slider for the rough number.
General information only · not the fund's assessment
This calculator provides an estimate for general information only, based solely on the figures you enter. It does not take into account your fund's actual income, losses, elections, or circumstances, and is not to be relied on for any decision. Consider whether you need information or services from a licensed AFS provider. Not a licensed financial service.
Uses the commencement-year thresholds ($3m / $10m, indexed in later years) and the final-law two-tier proportional method (+15% between $3m and $10m, +25% above $10m) on realised earnings. Does not model carry-forward losses, the SMSF cost-base-reset election, defined benefit interests, or multiple accounts. Sources: ATO, Better Targeted Super Concessions (law, 13 Mar 2026); Treasury regulations Mar 2026.
This is an estimate from two inputs. M2 Threshold tracks the real position from your fund's actual data.
The final law is not the 2023 bill
Division 296 received Royal Assent on 13 March 2026 in a substantially redesigned form. If your mental model comes from the 2023 headlines, all four of its pillars changed:
| 2023 bill (repealed design) | Final law (from 1 Jul 2026) |
|---|---|
| Tax on unrealised balance growth (paper gains) | Tax on realised earnings only: ordinary tax principles, CGT discount preserved, losses carried forward |
| A single +15% tier above $3m | Two tiers: +15% on the $3m to $10m portion, +25% on the portion above $10m |
| Fixed $3m threshold, never indexed | Both thresholds indexed from commencement |
| No transition relief for SMSFs | SMSF cost-base-reset election available at commencement |
How the two-tier calculation works
The tax applies to the share of your realised earnings that matches the share of your balance sitting in each tier. Worked example, straight from the published guidance: a $15m total super balance with $900k of realised earnings for the year.
- $7m of the balance sits between $3m and $10m: that is 7/15 of the balance, so 7/15 of the earnings ($420k) is taxed an extra 15% = $63,000
- $5m sits above $10m: 5/15 of earnings ($300k) is taxed an extra 25% = $75,000
- Total additional tax: $138,000, on top of the fund's ordinary tax
Two things trustees consistently miss: the earnings figure is realised (an unsold share portfolio growing on paper creates no Division 296 liability) and the thresholds are per person across all super, not per fund.
The same worked example, as a line-by-line table with the statute cited: Division 296 splits realised earnings across two tiers.
Common Division 296 questions
- When did Division 296 start?
- Division 296 commenced on 1 July 2026. For the first year, total super balance is tested at 30 June 2027 only; from 2027-28 the test uses the higher of the opening and closing balance.
- What are the Division 296 tax rates and thresholds?
- An additional 15% applies to realised earnings attributable to the portion of a member's total super balance between $3 million and $10 million, and 25% to the portion above $10 million, in proportion to the balance in each band. Thresholds are indexed from commencement.
- How is Division 296 calculated?
- The additional tax applies to the share of realised earnings that matches the share of the member's total super balance in each tier. Example: a $15m balance with $900k of realised earnings pays 15% on the 7/15 in the $3m to $10m band ($63,000) plus 25% on the 5/15 above $10m ($75,000), which is $138,000 in total, on top of the fund's ordinary tax.
- Does Division 296 tax unrealised gains?
- No. The 2023 proposal to tax unrealised gains was not enacted. The law as passed in March 2026 applies to realised earnings computed on ordinary tax principles.
- Does Division 296 apply to SMSFs?
- Yes. Division 296 is a member-level test across all of a person's super, including SMSF balances. It is not an SMSF-specific tax, but SMSF members with total super above $3 million are directly affected.
- What drives the Division 296 figure?
- Two inputs: the member's total super balance across every account against the $3m and $10m thresholds, and the realised earnings for the year. Because it is realised earnings, unrealised paper growth on an unsold holding creates no liability. Whether any step suits your own circumstances is a question for a licensed professional.
- Has the cost-base-reset election deadline passed?
- No. The election is lodged with the fund's 2026-27 annual return, typically during 2027. 30 June 2026 is the valuation date for the reset, not the decision deadline. The election is fund-level, covers every CGT asset, and cannot be revoked.
Know your Div 296 position before 30 June, not after.
M2 tracks the real inputs across the year from your fund's actual data: realised earnings as they accumulate, threshold proximity, and the year-end picture your accountant will need. Both M1 Franked and M2 Threshold are live now.
Sources
- ATO: Better Targeted Super Concessions is law (SMSF newsroom, 2026)
- Treasury Laws Amendment (Better Targeted Superannuation Concessions) Act 2026, Royal Assent 13 Mar 2026
- Treasury regulations, March 2026 (indexation + SMSF cost-base-reset election)
Not a licensed financial service. Information only. Nothing on this page is financial, tax, or legal advice.