- within Tax topic(s)
- with Senior Company Executives, HR and Inhouse Counsel
- with readers working within the Accounting & Consultancy, Automotive and Consumer Industries industries
In this episode of It Depends, partners Scott Hay-Bartlem and Clinton Jackson provide a February 2026 update on Division 296 tax, the tax on large superannuation balances.
For more information on this topic, check out the latest SMSFs with CGW podcast: Update on what is happening with Div 296 tax.
Available on Spotify, Apple Podcasts and the CGW website.
For an in-depth discussion on this topic, be sure to get your tickets to our Annual Adviser Conference on 26 and 27 March 2026.
Video transcript
Welcome to this edition of It Depends where we provide an update as at February 2026 on what is happening with Division 296 tax, the tax on large superannuation balances.
So, what happened to Div296 tax?
The original legislation fell out of Parliament when the last election was called. On 13 October 2025 an updated proposal was announced by the treasurer and lucky for us, just before Christmas last year, a whole new draft bill was presented to us with the new concepts for Div 296.
What is the new start date?
So, the new proposed start date remains at 1 July 2026. Effectively the first time our super balances will be tested against the thresholds for Div 296 tax will be the end of that first year at 30 June 2027. After that, our balances are going to be tested at the beginning and the end of the year, and our highest total superannuation balance is what will be used to calculate whether we're liable for tax or not.
Will the new tax apply to me?
Well, this is the 'it depends'. The legislation will tax balances between $3 and $10 million at 30%. For balances of more than 10 million you'll be taxed at 40%. Now those thresholds of three and ten million, they will be indexed, in different increments over time. The ATO will effectively calculate your tax based on a proportion of your fund earnings.
What else has changed?
The tax will apply to a proportion of fund earnings, which is its taxable earnings with some adjustments. For SMSFs, an actuary will calculate the fair and reasonable apportionment between the members and that's what the tax will be based on for each person. Because of the way the capital gains tax rules work, there is the opportunity to reset cost basis for Division 296 purposes. Each fund will have to make an election. It will then apply to all of the fund's assets, and you have to make the election by the due date for the fund's tax return for the 2026/2027 year. Now this is our update on the Div 296 tax at February 2026.
We will keep you updated if there's further announcements because it is only in draft form at the moment and has not been introduced to Parliament. Now, if you'd like more detail on how the rules actually work and some of the intricacies of the new Div 296 tax, have a look at our podcast, SMSFs with CGW, where we talk about Div 296 tax in more detail. Also if you'd like to really delve into the nitty gritty, come on to our Adviser Conference in March 2026 where we will talk about all things Div tax in a lot more detail. Thanks for watching this edition of It Depends.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.
