The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026External Link and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026External Link received royal assent on 13 March 2026 and are now law.
Draft regulations are open for consultation and you may view them hereExternal Link.
Better Targeted Super Concessions (Division 296)
This means Better Targeted Super Concessions (Division 296), a key aspect of those acts, will apply from the 2026–27 financial year onwards.
From 1 July 2026, if your total super balance (TSB) at the end of the financial year exceeds the large super balance threshold (LSBT) (set at $3 million for the 2026–27 financial year) you will be subject to Division 296 tax of 15% on the proportion of earnings relating to your TSB that exceeds the LSBT.
Further, if your TSB at the end of the financial year exceeds the very large super balance threshold (VLSBT) (set at $10 million for the 2026–27 financial year) you will be subject to additional Division 296 tax of 10% on the proportion of earnings relating to your TSB that exceeds the VLSBT.
For subsequent years, in considering whether you have exceeded the LSBT or VLSBT for a financial year and are liable to Division 296 tax, your TSB used will be the greater of your TSB amounts either immediately before, or at the end of, that financial year.
These thresholds will be indexed incrementally to the consumer price index.
- The LSBT is indexed in $150,000 increments.
- The VLSBT is indexed in $500,000 increments.
If you have members whose Division 296 TSB exceeds the LSBT you'll need to report new information in the SMSF annual return for the 2026–27 financial year onwards.
Total super balance
The new law also changes the definition of TSB.
From 1 July 2026:
- An individual’s TSB will be calculated as the sum of the TSB values for each of their Australian superannuation interests. The TSB value will be determined using a method or value prescribed in the regulations.
- The TSB change ensures annual valuation requirements and removes the link to transfer balance account (TBA).
- Superannuation interests in foreign funds are excluded from an individual's TSB.
We will shortly be releasing detailed information at ato.gov.au on Better Targeted Super Concessions.
Low Income Superannuation Tax Offset (LISTO)
Also, as part of the new law, from 1 July 2027 the LISTO income threshold will increase from $37,000 to $45,000 matching the top of the second income tax bracket. The maximum payment will also increase to $810 to account for recent increases in the Superannuation Guarantee rate.
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