The new tax on super balances above $3 million is now law. For most families it changes nothing. For those close to or above the threshold, the first measurement date is 30 June 2027, and the questions it raises are family questions as much as tax questions.
The short version
Division 296 applies from 1 July 2026. It adds tax to part of the super earnings of people whose total super balance is above $3 million. Most Australians will never pay it.
For families who might, the useful work happens before 30 June 2027, with your accountant and your adviser in the same conversation. The decisions it touches, such as what sits in super, in whose name, and how wealth passes to the next generation, are bigger than the tax itself.
The facts
It is law and applies from 1 July 2026, for the 2026–27 income year onwards.
Above $3 million: an additional 15% tax applies to the proportion of your super earnings that relates to the part of your total super balance above $3 million.
Above $10 million: a further 10% applies to the proportion relating to the part above $10 million.
Both thresholds are indexed to inflation, in steps of $150,000 and $500,000 respectively.
It is based on realised earnings, such as interest, dividends, rent and capital gains when assets are sold, not on paper movements in your balance. The 2023 version of the proposal would have taxed unrealised gains; the final version does not.
It is measured per person, across all of that person's super accounts.
For the first year, balances are measured at 30 June 2027. Assessments for 2026–27 are due to start issuing in the second half of the 2027–28 income year.
Payment is due 84 days after the notice. The tax can be paid personally, or you can elect to have it released from your super.
How the proportion works
The extra tax applies to a share of the earnings, not to the whole balance. The Parliamentary Library gives this illustration: a member with a total super balance of $5 million and $50,000 of earnings for the year has 40% of their balance above $3 million. So 40% of the earnings, $20,000, attracts the additional 15%, or $3,000.
It is an illustration only. Your own figures depend on your balance, your earnings and how your fund calculates them.
Why this is a family question, not just a tax question
Whose name the super is in. Because it is measured per person, a couple with $4 million in one name and $1 million in the other is in a different position from a couple with $2.5 million each. Many families have never looked at the split.
The SMSF that owns the farm or the business premises. Many families hold farmland or business premises in a self-managed fund. If tax becomes payable and the fund's main asset is property, where the cash comes from matters. SMSFs can also make a one-off election to reset the cost base of their assets to 30 June 2026 values for Division 296 purposes. That is a decision for the trustees with their accountant, and it is tied to the fund's 2026–27 tax return.
Super as the family's estate vehicle. For many families, super has been the natural place to build wealth and pass it on. For most, that does not change. For larger balances, it adds a reason to look at the whole picture: super, family trusts, companies and personal names, and how each is set up to pass to the next generation.
Helping the children now or later. Families weighing up help with a house deposit or a business for an adult child are often making a related decision. Money that leaves super changes the balance that is measured. The two decisions are connected and are best made together.
Keeping the investment decision first. Because the tax is based on realised earnings, the timing of asset sales now matters more. That is a reason to coordinate decisions, not to let tax drive them. Portfolio construction, liquidity and time horizon still come first.
Questions to take to your accountant and adviser
What is our total super balance, person by person, and how close is each of us to $3 million?
How might that change by 30 June 2027, with contributions, earnings and withdrawals?
If we have an SMSF, should the trustees consider the cost-base election, and what valuations and records do we need?
Does it change what we hold inside and outside super, and in whose name?
How does it fit with our wills, binding nominations and plans for the children?
If the tax becomes payable, where will the cash come from?
Where York fits
York does not give tax advice. We work alongside your accountant. Our role is the whole family balance sheet: how your wealth is invested, how it is held across super, trusts and personal names, and how it is passed on.
If Division 296 may affect your family, the first step is a conversation with your accountant in the room. We offer a complimentary second opinion. Contact us to arrange a conversation.
Families are discussing these questions in our Facebook group, Inheritance, SMSF & Retirement Australia Chat. You are welcome to join.
Murdoch Gatti
York Wealth Management
Sources: Australian Taxation Office, Division 296 tax on large super balances and Better targeted superannuation concessions; Parliamentary Library, Bills Digest No. 48, 2025–26. Information current as at November 2026.
This article is general information about a change in the law. It is not tax advice. York Wealth Management does not provide tax advice. Speak to a registered tax agent about how Division 296 applies to you.
York Wealth Management Pty Ltd ABN 46 605 610 679 is a Corporate Authorised Representative (No. 001007972) of AD Advisory Services Pty Ltd ABN 68 005 830 802, AFSL No. 237058. Murdoch Gatti is an Authorised Representative (No. 001007979) of AD Advisory Services Pty Ltd.
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