--- title: Positive Changes to Division 296 Superannuation Tax description: An overview of the changes to the proposed Division 296 tax in Australia. image: https://blog.yieldadvisory.com.au/hubfs/Screenshot%202025-10-14%20at%208.47.50%20am-1.png --- [![](https://blog.yieldadvisory.com.au/hubfs/raw_assets/public/yieldadvisory-blog/images/yield-icon-logo-col.png)](https://yieldadvisory.com.au) - [home](https://yieldadvisory.com.au) - [about](https://yieldadvisory.com.au/about/) - [yield in the community](https://yieldadvisory.com.au/yield-in-the-community/) - [solutions](https://yieldadvisory.com.au/solutions/) - [Financial Advisory](https://yieldadvisory.com.au/financial-advisory/) - [Resources](https://yieldadvisory.com.au/financial-advisory/resources/) - [Business Advisory](https://yieldadvisory.com.au/solutions/#business-advisory) - [Tax Advisory](https://yieldadvisory.com.au/solutions/#tax-advisory) - [industries](https://yieldadvisory.com.au/industries/) - [Pharmacy](https://yieldadvisory.com.au/pharmacy/) - [Resources](https://yieldadvisory.com.au/pharmacy/resources/) - [Property + Construction](https://yieldadvisory.com.au/industries/#property-construction) - [Medical + Dental](https://yieldadvisory.com.au/industries/#medical-dental) - [Professional services](https://yieldadvisory.com.au/industries/#professional-services) - [xero](https://yieldadvisory.com.au/xero/) - [careers](https://yieldadvisory.com.au/careers/) - [blog](https://blog.yieldadvisory.com.au/) - [contact](https://yieldadvisory.com.au/contact/) - [request callback](https://yieldadvisory.com.au/contact/) # Positive Changes to Division 296 Superannuation Tax ![](https://blog.yieldadvisory.com.au/hubfs/Screenshot%202025-10-14%20at%208.47.50%20am-1.png) ## 14 Oct Positive Changes to Division 296 Superannuation Tax Posted at Oct 14, 2025 12:11:50 PM in articles by yield advisory It's been some time since our last update on the proposed** Division 296 tax**. We wanted to update you on some recent and significant changes to the proposed tax following an announcement from the Federal Treasurer. These changes are a welcome improvement and come after strong advocacy from across the financial advice industry.   ### Quick Reminder - What is Division 296 Tax?  Division 296 is a new, additional tax proposed by the Labour Government on high superannuation balances. It is designed to apply **extra tax on earnings** for individuals with **total super balances over $3 million**. Originally, this tax would have applied even to *unrealised gains* — that is, increases in asset values that hadn't been sold. This raised serious concerns across the industry due to fairness and complexity. ### What's Changing?  After widespread feedback, the government has announced a number of improvements to how Division 296 will work: - **Tax applies only to actual (realised) earnings**, not unrealised gains - **The $3 million threshold will now be indexed** to inflation (CPI) in $150,000 increments - A **second threshold of $10 million** is introduced: - Earnings over $10 million will attract a **40% tax rate** (combined) - This threshold will also be CPI-indexed, in $500,000 increments - **Start date delayed** by 1 year to **1 July 2026** - Applies to all super types, including **defined benefit pensions**   ### What Are the New Tax Rates ?  Here’s how earnings will be taxed under the new model: - **Up to $3 million:** 15% (standard fund tax) - **$3 million to $10 million:** additional 15% (total 30%) - **Over $10 million:** additional 25% (total 40%) ### How Will the ATO Administer the Tax?  The ATO will take the lead in calculating the Division 296 tax. Here's how it will work: 1. **Super funds will report member balances** to the ATO as usual 2. For members over the threshold, the ATO will request the **actual earnings** from the fund 3. The fund will calculate each member's **realised earnings**, using existing methods 4. The ATO will then calculate the tax amount based on how much of the member’s balance is above each threshold This process is intended to be as automated and fair as possible, using existing systems.   ### How Will My Tax Be Calculated?  The exact method is still under consultation, but here’s the general approach simplified: 1. The ATO identifies if your **total super balance (TSB)** is over $3 million 2. Your super fund calculates **your actual earnings** for the year 3. The ATO calculates: - What proportion of your balance is **over $3 million**, and - If applicable, what proportion is **over $10 million** 4. The ATO then applies the extra tax **only to the relevant portion of your earnings** #### **Example:** Sandra has a total superannuation balance of $15 million as at 30 June 2027. - The portion of her balance over $3 million is $12 million, which makes up **80%** of her total super. - The amount above $10 million is $5 million, or **33.33%** of her overall balance. Throughout the year, Sandra's super fund earned $500,000 in income and realised capital gains, with this amount attributed to her. The fund has already paid the standard 15% tax on this income. However, Sandra will also be liable for additional Division 296 tax. The calculation would be: - 15% on the part of earnings tied to the $3–$10 million range - Plus 10% on the portion linked to the balance over $10 million So her Division 296 tax bill would be: **(15% × 80% × $500,000) + (10% × 33.33% × $500,000) = $76,665**   ### Next Steps These updates will be legislated before the tax starts on **1 July 2026**, with further industry consultation expected.   We will continue to monitor developments and keep you updated. In the meantime, if you’d like to discuss how this might impact your super strategy, please don’t hesitate to reach out. #### yield advisory we provide dynamic business advisory, accounting solutions, and financial planning. We are here to help you do better and grow. #### let's talk info@yieldadvisory.com.au 0404 672 097 #### subscribe to our newsletter #### locations ##### Brisbane Level 2 850 Ann Street Fortitude Valley QLD 4006 ##### Sydney Level 24 300 Barangaroo Avenue Sydney NSW 2000 ##### Sunshine Coast Level 2 14-20 Aerodrome Road Maroochydore QLD 4558 © yield advisory Yield Financial Advisory Pty Ltd is an Authorised Representative of Yield FS Pty Ltd | AFSL 539098. [Privacy Policy](https://yieldadvisory.com.au/wp-content/uploads/Adviser-201905-SWM-Privacy-Policy-1.pdf)