About Division 296 tax
From 1 July 2026, Division 296 tax will reduce the tax concessions available to individuals through their super. Division 296 tax can generally be paid from the individual’s super fund(s).
Division 296 tax applies at a rate of 15% to your taxable super earnings. Broadly, this is a portion of the earnings on all your super interests determined by the extent that your total super balance (TSB) exceeds the large super balance threshold (LSBT).
An additional rate of 10% will also apply to your very large super balance earnings component. Broadly, this is a portion of the earnings on all your super interests, determined by the extent that your TSB exceeds the very large super balance threshold (VLSBT).
For the 2026–27 income year, the LSBT is $3 million and the VLSBT is $10 million. Both thresholds may increase due to indexation in future years.
For the 2026–27 income year for Division 296 to apply, your TSB at the end of that income year must be greater than the LSBT. For subsequent income years, it will apply if either your TSB just before the start of the income year or at the end of the year exceeds these thresholds.
The LSBT and the VLSBT will be indexed incrementally in line with the consumer price index:
- LSBT is indexed in $150,000 increments.
- VLSBT is indexed in $500,000 increments.
Limited recourse borrowing arrangements (LRBA) amounts are disregarded when calculating your TSB for Division 296 tax purposes.
How will you know if you need to pay
Each super fund in which you have a super interest, or that holds interests that support certain super income streams you receive, will calculate your relevant super earnings in relation to that interest or super income stream. Once your super funds report your relevant super earning, we will calculate your Division 296 tax amount and issue you a Division 296 tax notice of assessment.
Division 296 tax is generally due and payable 84 days after we issue you a Division 296 tax notice of assessment. You can pay this tax yourself or elect (within 60 days after we issue you a Division 296 tax notice of assessment) to release money from one or more of your super funds to pay the liability. If you don't pay the debt on time, and don't elect to have money released from a super fund, the Commissioner of Taxation may ask one of your funds to release an amount of your super to pay the debt on your behalf.
If you have a defined benefit interest and have not yet taken an end benefit, any Division 296 tax that relates to that interest will be deferred until a later date. If you don't pay your Division 296 tax by the due date, interest will be applied on the amount of Division 296 tax you owe. You can choose to voluntarily pay your deferred Division 296 tax liability before it is due to avoid interest being applied.
If you lodge your tax return using myTax, your Division 296 tax notice of assessment will be sent to your myGov Inbox. If you want your notice of assessment to go to your tax agent instead, ask them to update your communication preferences.
Division 296 tax assessments for the 2026–27 income year will begin issuing in the later half of the 2027–28 income year.
See how and when to pay Division 296 tax.
Individuals excepted from Division 296 tax
You are excepted from paying Division 296 tax if you:
- are a child recipient of a super income stream at any time during the income year
- are an individual who has received a structured settlement contribution made to you as a payment for a personal injury, in the income year, or any earlier income year, or
- die in the 2026–27 income year.
Super earnings excluded from Division 296 tax
There are rules for specific super earnings excluded from Division 296 tax, for:
- State higher level office holders and their reversionary pension recipients
- Commonwealth justices and judges and their reversionary pension recipients
- Territory Supreme Court judges and their reversionary pension recipients
- individuals with super interests in foreign super funds
- individuals with super interests in non-complying super plans.
For more information, see Excluded interests.
Other specific rules for Division 296 tax
Specific rules apply to Division 296 tax for:
- individuals with defined benefit interests and other prescribed interests
- temporary residents who depart Australia.
Further guidance
For more information, refer to the regulationsExternal Link and the following relevant legislation: