Division 296 has finished its run through Parliament. The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 passed the House of Representatives on 5 March, passed the Senate on 10 March and received royal assent on 13 March 2026. The new tax is now law and commences on 1 July 2026. For anyone with a larger superannuation balance, the planning window before 30 June is real and it is short.
How the tax works
Division 296 adds a further layer of tax on earnings attributable to larger superannuation balances. The design in the legislation:
- An additional 15% tax applies to earnings attributable to the part of a person’s total superannuation balance between $3 million and $10 million. That takes the effective rate on those earnings to 30%.
- An additional 25% applies to the part above $10 million, an effective 40% on those earnings.
- The tax applies to realised earnings.
- First assessments will be based on balances at 30 June 2027.
- The ATO calculates the liability.
Some operational detail is still being settled. A consultation on draft regulations is open until 7 April 2026, so expect further guidance on the mechanics over the coming months.
Why SME owners should pay attention
It is tempting to file this under taxes that apply to someone else. For business owners, that would be a mistake. Business real property held in a self managed super fund is one of the most common paths to a balance above $3 million; an owner who moved their premises into an SMSF years ago and watched the property appreciate may already be in range.
Property also raises the harder question: liquidity. The fund may hold a building rather than cash, but a tax liability has to be paid with money. Working out where that money would come from is not a question to leave until an assessment arrives.
What to do before 30 June 2026
- Get current valuations of SMSF assets. You cannot model exposure on stale numbers; property valuations in particular tend to lag.
- Model your exposure. Work out whether your total superannuation balance is likely to sit above $3 million and what the additional tax could look like on realistic earnings assumptions.
- Review contribution plans. Planned contributions change the balance picture. Check whether the current strategy still makes sense under the new rules.
- Consider how the fund would meet a future liability. If the fund’s assets are illiquid, think through the options now rather than under deadline pressure.
- Take personal advice. The right answer here is highly individual; a strategy that suits one fund can be exactly wrong for another.
Why act now rather than wait
First assessments will be based on 30 June 2027 balances, so there is time before any tax falls due. But the decisions that shape your position (valuations, contributions, asset mix, liquidity planning) are made well before then; many of them are best reviewed before this 30 June. The consultation on draft regulations may refine the mechanics; it will not change the core design, which is now law.
Before you act
This update is general information only and is not tax or financial advice. Division 296 outcomes depend heavily on individual circumstances. Confirm your position with a registered tax agent or licensed financial adviser before acting.