In Brief
- The proposed Division 296 tax operates in two tiers: an additional 15% on earnings from balances above $3 million (combined 30%) and a further 10% surcharge on earnings above $10 million (combined 40%), with both thresholds CPI-indexed if the bill is enacted.
- The death exemption applies only in the 2026-27 transitional year; from 2027-28, Division 296 applies in the year of death using the member's opening TSB — removing a planning strategy that was available under earlier drafts.
- The bill has not yet passed the Senate; all planning decisions should be made on the assumption that the measure may commence on 1 July 2026, not as a certainty. The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 draws most of its public attention to the $3 million threshold. But for individuals with Total Superannuation Balances above $10 million, the bill introduces a second tier that produces a combined effective tax rate of 40% on superannuation earnings — above the standard corporate tax rate, and substantially above what most large superannuation balances have historically faced. The bill was introduced to Parliament on 11 February 2026 and, as of March 2026, has not passed the Senate.
The estate planning implications of the proposed regime deserve attention separately from the operational tax question. Death, reversionary pensions, and the interaction with non-dependant beneficiary tax rates create a set of outcomes that are less intuitive than the headline rates suggest. The revised bill has also closed the planning window that existed in earlier drafts. The two-tier structure: rates and thresholds in detail If enacted, Division 296 operates as a surcharge on top of the existing 15% fund-level earnings tax. For the proportion of realised earnings attributable to a Total Superannuation Balance between $3 million and $10 million, an additional 15% applies — producing a combined rate of 30%. For the proportion attributable to balances above $10 million, a further 10% applies on top of that, producing a combined rate of 40%. The Tier 2 $10 million threshold was announced by Treasurer Jim Chalmers on 13 October 2025 and incorporated into the February 2026 bill. Both thresholds are indexed: the $3 million threshold increases in $150,000 increments per CPI adjustment period, and the $10 million threshold in $500,000 increments. This indexation was a direct response to industry criticism of the original 2023 bill, which set a fixed nominal threshold that would have captured increasing numbers of members over time without any corresponding increase in real terms.
Disclaimer: This article is for general informational purposes only and does not constitute legal, tax, or financial advice. Readers should seek professional advice tailored to their specific circumstances. Information reflects the position as of the publication date and may be subject to change. This article addresses UAE, Australian, UK, and Canadian law where specified; different rules apply in other jurisdictions. © 2026 Alldren. All rights reserved. This article addresses proposed Australian superannuation legislation that has not yet been enacted. Readers should seek advice from a qualified Australian financial adviser or tax agent before making any superannuation decisions.
