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From 1 July 2026, Division 296 will introduce additional tax on superannuation balances above $3 million. For many Australians, this will be a marginal change. For high-balance super members, it’s something more significant — a shift that could reshape how sup.....
From 1 July 2026, Division 296 will introduce additional tax on superannuation balances above $3 million.
For many Australians, this will be a marginal change.
For high-balance super members, it’s something more significant — a shift that could reshape how super fits within a broader wealth strategy.
The key question is no longer just “what tax will I pay?”
It’s “is my current strategy still the right one?”
Division 296 applies an additional tax on earnings linked to the portion of a member’s super balance above $3 million.
In practical terms:
Earnings above the $3M threshold may be taxed at up to 30%
For balances above $10M, this may increase to 40%
While super remains a concessional environment, the gap between super and alternative structures is narrowing for higher balances.
Division 296 is not just a tax increase — it introduces a new layer of strategic complexity.
For affected clients, it influences:
how wealth compounds over time
when and how assets are sold
how tax liabilities are funded
whether assets remain best held inside super
In short, it changes the long-term economics of super for larger balances.
One of the most overlooked aspects of Division 296 is how it compounds.
As super balances grow, more earnings fall above the $3 million threshold. That means what may appear manageable initially can become more material over time — particularly for clients with strong-performing or concentrated portfolios.
A first-year view is not enough.
This is a long-term modelling exercise.
It’s the most common question - and often the wrong starting point.
While reducing balances may lower exposure to Division 296, the path to get there matters.
Selling assets to fund withdrawals can:
trigger capital gains within the fund
increase taxable earnings in that year
potentially increase Division 296 liabilities in the short term
In some cases, a staged or alternative strategy produces a better outcome.
The focus should not be on avoiding tax in isolation — but on achieving the best overall result across your total wealth position.
Division 296 liabilities may be paid from super funds.
For portfolios with sufficient liquidity, this is manageable.
For SMSFs holding:
direct property
business premises
unlisted or illiquid assets
…it introduces real complexity.
Without adequate liquidity, trustees may be forced to sell assets at suboptimal times — impacting both returns and long-term strategy.
Liquidity planning is now a core part of super strategy.
A key transitional measure allows SMSFs to reset the cost base of assets to market value at 30 June 2026 (for Division 296 purposes).
This can be highly beneficial for funds with significant unrealised gains.
But it is not universally advantageous.
The decision depends on:
unrealised gains or losses
expected timing of asset sales
future balance projections
overall tax position
Critically, this is a time-sensitive opportunity.
Preparation — including valuations — needs to happen well in advance.
Division 296 is not just about super.
It’s about where and how wealth should be held going forward.
For many clients, this is the moment to revisit:
the role of super in their long-term plan
alternative ownership structures
investment allocation across environments
access to capital and liquidity
estate and intergenerational planning
There is no single “right” answer — only the right answer for your situation.
The best outcomes won’t come from reacting in 2026.
They will come from:
early modelling
considered scenario planning
structured decision-making
Many of the most important decisions — including the CGT reset and liquidity preparation — require time.
Delaying the conversation reduces flexibility.
At Altus Financial, we work with clients to translate complex changes into clear, practical strategies.
Our approach includes:
modelling projected Division 296 impact over time
testing withdrawal and retention strategies
assessing liquidity requirements
evaluating the CGT reset decision
aligning super strategy with broader wealth and estate planning
For clients with balances above, or approaching, $3 million, this is not a future issue.
It’s a now decision.
Division 296 represents a permanent shift in the super landscape.
Some clients will stay the course.
Others will adapt.
The difference comes down to planning early.
Speak with your Altus adviser to understand what this means for you.
Set your business on the right path with this simple guide.
Make sure you’re on the right track with this online checklist.
Wealth, Strategy, Growth, Investments, Budget - 9 min read
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Altus Wealth Pty Limited ABN 55 649 956 212 is an Authorised Representative of Altus Financial Services Pty Ltd ABN 24 637 026 825 an Australian Financial Services Licensee (AFSL no. 520266). Altus Financial Services Pty Ltd is not responsible for the advice, products and services provided by Altus Accounting. Julie Azzi is a credit representative (CR No. 366834) of BLSSA Pty Ltd ABN 69 117 651 760 (Australian Credit Licence 391237).
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