What is your total super balance for Division 296 tax
Your total super balance (TSB) is the sum of the TSB values of all your Australian super interests, and any super interests supporting a super income stream of which you are a retirement phase recipient due to someone else's death. It also includes super interests you hold notionally due to a family law split.
While limited recourse borrowing arrangements (LRBA) amounts are sometimes included in your TSB, they are never included in your TSB for Division 296 purposes.
Your TSB is based on information reported to us by your super fund(s). If you have a question about the reported TSB value of a super interest included in your TSB, you will need to contact the relevant super fund.
How your total super balance is used to calculate Division 296 tax
Division 296 tax applies to the portion of your taxable super earnings that relates to the part of your TSB that is greater than the large super balance threshold (LSBT), either:
- just before the start of that income year
- at the end of that income year.
If your TSB at these times doesn’t exceed the LSBT, you won't have taxable super earnings. You won't be subject to Division 296 tax for that income year.
Transitional provisions apply for the 2026–27 income year. For that income year, when determining whether you may be subject to Division 296 tax, we only consider whether your TSB at 30 June 2027 is greater than the LSBT.
Example 1: TSB less than $3 million
Kenny has one super interest that has a TSB value of $150,000 at the end of 30 June 2027, which is his TSB for Division 296 tax purposes.
At the end of 30 June 2028, the TSB value of Kenny's interest in the fund increases to $170,000. The ATO calculates his TSB at that time to be $170,000.
Assuming the LSBT is not indexed, it will be $3 million for the 30 June 2028 income year. As his TSB at the end of the income year (30 June 2028) and just before the start of the income year (30 June 2027) are both less than the LSBT for that income year, Kenny won’t be assessed for Division 296 tax for the 2027–28 income year.
End of example
Example 2: TSB greater than $3 million just before the start of the 2026–27 income year
Mary has one super interest that has a TSB value of $3,150,000 at the end of 30 June 2026, which is her TSB for Division 296 tax purposes.
At the end of 30 June 2027, the TSB value of her interest in the fund decreases to $2,950,000.
Transitional arrangements apply for the 2026–27 year so that Division 296 tax liability for that income year is determined solely by reference to Mary's TSB at the end of the income year. As her TSB at the end of the 2026–27 income year is not more than the LSBT, Mary won't be assessed for Division 296 tax for that year.
End of example
Example 3: TSB greater than $3 million just before the start of the current income year but not at the end of the current income year
Eliza has one super interest that has a TSB value of $3,150,000 at the end of 30 June 2027, which is her TSB for Division 296 tax purposes.
At the end of 30 June 2028, the TSB value of her interest in the fund decreases to $2,950,000 which is her TSB for Division 296 tax purposes. Her total super earnings for the income year are greater than nil.
As Eliza's TSB just before the current income year is greater than the LSBT and her total super earnings are greater than nil, Eliza will have taxable super earnings for the income year and will be assessed for Division 296 tax for the 2027–28 income year.
End of example
Example 4: balance in super fund less than LSBT just before the start and at the end of income year
Garrick has 2 super interests, each in a separate super fund. At the end of 30 June 2027, the TSB value of his interest in the Let Me Retire Super Fund is $1,000,000 and in the Money Savings Super Fund is $1,850,000. The ATO calculates his TSB at that time to be $2,850,000.
During the 2027–28 income year the following occurred in relation to Garrick's interest in the Let Me Retire Super Fund:
- on 18 September 2027 the value of his interest increases to $2,600,000 because he receives insurance proceeds, and
- Garrick withdraws $1,550,000 from his interest.
At the end of 30 June 2028, the TSB value of Garrick's interest in Let Me Retire Super Fund is $1,050,000 and in Money Savings Super Fund is $1,900,000. The ATO calculates his TSB at that time to be $2,950,000.
Garrick's total super earnings for the year are greater than nil.
Partway through the year, Garrick's TSB would have been higher than the LSBT because of the insurance proceeds paid into the Let Me Retire Super Fund. However, as his TSB at the end of the year, and his TSB just before the start of the income year, are below the LSBT, he will not have taxable super earnings and will not be assessed for Division 296 tax for the 2027–28 income year.
End of exampleHow Division 296 tax is calculated when you die
If you die during an income year and your TSB just before the start of that income year is over the LSBT, you will be assessed on any amount of super earnings for the interest until the earlier of either:
- all death benefits have been paid or distributed from the interest
- a death benefit income stream has commenced to be paid from the interest.
The earnings for your super interests will be included in your Division 296 tax calculation for the income year in which you die, even if they relate to a later income year. Your super fund will report your relevant super earnings to us for each income year after your death. Your Division 296 tax assessment for the year in which you die will be amended to include those earnings as they are reported.
After you die, the TSB value of your interests will be nil for Division 296 purposes. This ensures any taxable super earnings are determined using the proportion your TSB exceeded the LSBT at the start of the income year.
There are specific rules which apply to determine relevant super earnings in the income year you die for any defined benefit interest you have that is not in the retirement phase, and certain interests prescribed by the regulations.
Transitional arrangements apply for the 2026–27 income year. Consequently, if you die in the 2026–27 income year you will never be liable to pay Division 296 tax.
Example 1: death in the 2026–27 income year
Alex has a TSB of $4,200,000 at the end of 30 June 2026.
Alex dies on 15 February 2027. As Alex died during the 2026–27 income year, he is not subject to Division 296 tax.
End of example
Example 2: super interest not paid out in year of death
Dawn has a super interest in an SMSF. Her TSB value of that interest at the end of 30 June 2027 is $4,000,000, which is her TSB for Division 296 tax purposes.
Dawn dies on 15 February 2028. Her TSB at the end of the 2027–28 income year, and for subsequent income years, is considered to be nil for Division 296 tax purposes.
Dawn's interest in her SMSF is not paid out in full until the 2028–29 income year as it has taken some time for her estate to be settled.
Dawn's SMSF reports relevant super earnings attributable to her interest in the fund to the ATO for both the 2027–28 and 2028–29 income years.
As Dawn's TSB just before the start of the income year in which she dies (2027–28) is over the LSBT and she had an interest in her SMSF for the 2027–28 income year and 2028–29 income year, any relevant super earnings in those income years will be included in a Division 296 tax assessment for the 2027–28 income year (year of death).
Her fund will have to report the relevant super earnings to the ATO for each of those years. Her 2027–28 Division 296 tax assessment will be issued and amended to include earnings in future years. Any assessment forms part of Dawn's final tax affairs and may be paid from Dawn's superannuation interest or estate.
End of example
Example 3: TSB less than LSBT just before the income year you die
Jack has a Division 296 TSB of $2,500,000 at the end of 30 June 2028. Jack dies on 10 August 2028. As Jack is deceased, his Division 296 TSB at any time after his death is nil.
When determining if Jack is liable for Division 296 tax, the ATO will look at his TSB just before the start of the year of death (at the end of 30 June 2028). Jack's TSB at that time is under the LSBT so Jack will not have taxable super earnings and will not be assessed for Division 296 tax for the 2028-29 income year.
End of exampleHow your fund calculates your relevant super earnings
Your total super earnings for an income year that will be subject to Division 296 tax is made up of your relevant super earnings from each of your super interests (not including excluded earnings). This includes super interests that you receive a super income stream from as a reversionary beneficiary or hold notionally due to a family law split.
Most super funds will use a general attribution rule to calculate your relevant super earnings. They will do this by calculating their Division 296 fund earnings and then attributing your share of those earnings to your super interest(s) in the fund. The fund will then report your relevant super earnings to the ATO. We will use this information to calculate your total super earnings and Division 296 tax.
For defined benefit interests not in retirement phase and certain prescribed interests, your relevant super earnings will be calculated based on a change in the TSB value of the super interest in accordance with a specific formula under the law.
Your super fund's role
Your super fund(s) (including SMSFs that you have an interest in) play a critical role in ensuring we have the information we need to correctly calculate your Division 296 tax liability. Your super fund(s) will need to complete specific calculations under the law and report your relevant super earnings to us.
For funds that are not an SMSF, we will ask them for this information. SMSFs will report this information to us via the Self-managed superannuation fund annual return.
If you are a member of a SMSF and you think the combined value of your super interests will be greater than the LSBT, you should let your SMSF know, or ensure the necessary steps are taken to calculate your relevant earnings for the income year.
We are currently drafting a law companion ruling that will support your fund with calculating their Division 296 fund earnings and members' relevant super earnings. In the meantime, for more information, refer to About Division 296 tax for APRA funds and About Division 296 tax for SMSFs.
Taxable super earnings
Your taxable super earnings for an income year is the proportion of your total super earnings attributable to that part of your TSB exceeding the LSBT for an income year. We may also need to determine the proportion of your total super earnings attributable to the part of your TSB exceeding the very large super balance threshold (VLSBT).
First we need to identify your Division 296 TSB reference amount which is, for the:
- 2026–27 income year, your TSB at the end of that income year
- 2027–28 income year onwards, the greater of your TSB just before the start of that income year, and your TSB at the end of that year.
Remember, if your fund has any limited recourse borrowing arrangements (LRBA), these amounts are excluded from when determining your TSB for Division 296 tax purposes.
To calculate the proportion of your TSB that exceeds the LSBT and VLSBT, the following formulas are used (rounded to 2 decimal places):
Proportion over LSBT
[(Your total super balance reference amount − the large super threshold for the year) ÷ your total super balance reference amount] × 100
Proportion over VLSBT
[(Your total super balance reference amount − the very large super threshold for the year) ÷ your total super balance reference amount] × 100
Once we determine the percentage of your TSB reference amount that is over each of the relevant thresholds, we multiply these by your total super earnings for the year to assess how much of your super earnings are taxable. Your total super earnings are generally the total of the relevant super earnings your fund(s) have reported to us.
Example 1: total super earnings
Leanne has interests in 3 super funds in the 2026–27 income year. Leanne's TSB at the end of 30 June 2027 exceeds the LSBT. Her super funds report the following relevant earnings attributable to Leanne for the income year:
- Obi-Wan my retirement SMSF – $20,000
- Super Wookie defined benefit fund – $5,000
- Ewok lots of super APRA fund – $3,500.
Leanne's total super earnings for the 2026–27 income year are $28,500.
End of example
Example 2: taxable super earnings
For the 2026–27 income year, Leanne's TSB reference amount is $3,500,000. Based on the previous example, her total super earnings for this income year are $28,500. Her taxable super earnings for the 2026–27 income year are $4,072.65, as follows:
($3,500,000 − $3,000,000) ÷ $3,500,000 × 100 = 14.29%
$28,500 × 14.29% = $4,072.65.
End of exampleCalculating Division 296 tax
Your Division 296 tax liability is calculated as:
- 15% tax on the total super earnings that relate to the percent of your TSB reference amount over the LSBT
- an additional 10% tax on total super earnings that relate to the percent of your TSB reference amount over the VLSBT.
Example 1: Division 296 tax
For the 2026–27 income year, Leanne's Division 296 tax liability is $610.90, calculated as:
$4,072.65 × 5% = $610.90
End of example
Example 2: Division 296 calculation – 2026–27 income year
Jordan has one super interest with a TSB of $4,000,000 on 30 June 2027. This exceeds the LSBT of $3,000,000 for the 2026–27 income year. The ATO calculates his TSB reference amount at that time as $4,000,000, which will be used to determine the proportion of the TSB that exceeds the LSBT.
Jordan's super fund calculates his relevant super earnings that are attributable to his super interest as $100,000 and reports this amount to the ATO. As Jordan has no other super interests, this amount will also be his total super earnings.
As Jordan's TSB at the end of the 2026–27 income year is greater than the LSBT, and his total super earnings are greater than nil, he will have taxable super earnings for Division 296 tax purposes.
The proportion of Jordan's TSB above the LSBT is 25%, calculated as:
((TSB reference amount − LSBT) ÷ TSB reference amount) × 100
(($4 million − $3 million) ÷ $4 million) × 100.
Jordan's taxable super earnings is $25,000, calculated as:
Total super earnings × proportion of TSB above LSBT
$100,000 × 25% = $25,000.
Jordon's Division 296 tax liability is $3,750, calculated as:
Taxable super earnings × 15%
$25,000 × 0.15 = $3,750.
End of example
Example 3: Division 296 tax calculation – 2027–28 income year onwards
Andrew is a member of an SMSF and does not have an interest in any other fund. The TSB value of the interest in the SMSF on 30 June 2027 is $3,900,000. Andrew's TSB at that time is $3,900,000. During the 2027–28 income year, the value of his interest is reduced due to a decrease in the value of the SMSF's assets. In addition, Andrew has met a condition of release and takes a lump sum payment from his SMSF. The TSB value of his interest in the SMSF on 30 June 2028 is $2,920,000. Andrew's TSB at that time is $2,920,000.
Andrew's SMSF has reported that his relevant super earnings for the 2027–28 income year are $227,000. As this is his only super interest, this will be his total super earnings for the year for Division 296 tax purposes.
From the 2027–28 income year onwards, the greater of the TSB just before the start of the year and at the end of the year is used to determine if Andrew's TSB exceeds the LSBT. In this instance Andrew's TSB just before the start of the current year is the greater and exceeds the LSBT.
As Andrew's TSB is greater than the LSBT and his total super earnings are greater than nil, he will have taxable super earnings for Division 296 tax purposes.
Andrew's TSB reference amount is $3,900,000 which will be used to determine the proportion of his TSB that is over the LSBT.
The proportion of Andrew's TSB above the LSBT is 23.08%, calculated as:
((TSB reference amount − LSBT) ÷ TSB reference amount) × 100
(($3,900,000 − $ 3,000,000) ÷ $3,900,000) × 100.
Andrew's taxable super earnings are $52,391.60, calculated as:
Total super earnings × proportion above threshold
$227,000 × 23,08% = $52,391.60.
Andrew's Division 296 tax liability is $7,858.74, calculated as:
Taxable super earnings × 15%
$52,391.60 × 0.15 = $7,858.74.
End of example
Example 4: Division 296 tax calculation for TSB exceeding the VLSBT
Kelly has 2 interests in her super fund. The total super balance between both of her interests is $12,000,000 on 30 June 2027.
Kelly's super fund reports that her relevant super earnings attributable to her interests for the 2026–27 income year totals $500,000. As she does not have any other interests, this will be her total super earnings for the year.
As Kelly's TSB at the end of the 2026–27 income year is greater than the LSBT and her total super earnings is greater than nil, Kelly will have taxable super earnings for Division 296 tax purposes. In addition, as her TSB exceeds the VLSBT Kelly will have a very large superannuation balance earnings component.
Kelly's TSB reference amount is $12,000,000 which will be used to determine the proportion of her TSB that is over the LSBT and VLSBT.
The proportion of Kelly's TSB above the LSBT is 75%, calculated as:
TSB reference amount − LSBT ÷ TSB reference amount × 100
(($12 million − $3 million) ÷ $12 million) × 100.
The proportion of Kelly’s TSB above the VLSBT is 16.67%, calculated as:
TSB reference amount − VLSBT ÷ TSB reference amount × 100
(($12 million − $10 million) ÷ $12 million) × 100.
Kelly’s Division 296 tax comprises the following 2 parts:
- For the proportion above the LSBT, her taxable super earnings are $375,000, calculated as
- Total super earnings x proportion above the LSBT
$500,000 × 75%.
As her TSB exceeds the VLSBT she will also have a VLSB component of $83,350, calculated as
Total super earnings × proportion above the VLSBT
$500,000 × 16.67%.
Kellie's Division 296 tax is calculated as:
$375,000 × 15% = $56,250
$83,350 × 10% = $8,335.
Kelly's Division 296 tax liability for the 2026–27 income year will be $64,585, calculated as:
($56,250 + $8,335).
End of example