As you’d already know, Better Targeted Super Concessions (Division 296) is now law and comes into effect for the 2026–27 financial year onwards.
This means, from 1 July 2026 individuals with a total super balance above the large super balance threshold (LSBT) (set at $3 million for 2026–27) will be subject to Division 296 tax of an additional 15% on the proportion of earnings relating to their TSB exceeding the LSBT.
On top of this, super balances above the very large super balance threshold (VSLBT) (set at $10 million for 2026–27) will be subject to an additional tax of 10% on the proportion of earnings exceeding the VLSBT.
Be ready
SMSFs will need to calculate the relevant super earnings for their members that have a TSB exceeding the LSBT (in-scope members) and report them to the ATO.
You can find everything you need to know about Division 296 as it affects individuals and as it affects SMSFs.
Here are some things you should be prepared for:
- Reporting your member's relevant super earnings in your SMSF Annual Return from 2026–27 onwards You will know your member is impacted by Division 296 if the TSB value of the member's interest in the SMSF exceeds the LSBT
- Consider if your SMSF would like to opt in for the CGT adjustment for Division 296 tax. The election will apply to all your CGT assets held by the fund on 30 June 2026 and cannot be revoked. Your members do not need to be over the LSBT to opt in for this adjustment. You will need to make your election by the due date of your 2026–27 SMSF Annual Return.
- Division 296 Notices of assessment for the 2026–27 income will issue in the latter half of 2027–28. Your member may elect to release money from their fund to pay their Division 296 tax liability.
We strongly recommend you take advantage of the information on our website to prepare. We are currently drafting law companion rulings to help funds calculate their in-scope members' relevant super earnings.
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