The landscape of Australian superannuation is set for a significant shift. Following amendments announced by the Treasury, the proposed Better Targeted Superannuation Concessions (BTSC) tax—commonly known as the revised Division 296 tax—is scheduled to commence from 1 July 2026.
Super Alert: Decoding Australia’s Revised Division 296 Tax and the New $10M Threshold
If you are one of the members with a Total Superannuation Balance (TSB) approaching or exceeding $3 million, here is a detailed breakdown of what the revised rules mean for you, focusing on the new tiered structure and the crucial shift in how “earnings” are calculated.
1. The Critical Shift: From Unrealised to Realised Earnings
The biggest practical change in the revised Division 296 proposal is the method used to calculate the earnings subject to the additional tax.
The New Approach: The additional tax will now be based on your super fund’s realised earnings (which includes interest, dividends, rent, and realised capital gains, adjusted for contributions and withdrawals). This is a welcome change from the original proposal, which would have taxed volatile, unrealised gains.
This shift aims to align the super tax calculation more closely with standard income tax concepts, but the precise details of how funds will attribute these realised earnings to individual members are still subject to further consultation.
2. Introducing the Two-Tiered Tax Structure
|
TSB Range (Approximate, Indexed) |
Additional Tax Rate (BTSC) |
Total Concessional Tax Rate on Corresponding Earnings |
|---|---|---|
|
Up to $3 Million |
0% (Standard concessional rate applies) |
15% |
|
$3 Million to $10 Million |
An additional 15% |
30% (15% fund tax + 15% additional tax) |
|
Above $10 Million |
An additional 25% |
40% (15% fund tax + 25% additional tax) |
The final liability will be assessed against the individual, who can choose to pay the tax personally or elect to have the payment released from their super fund.
3. Calculation Examples: Putting the Formula to Work
The tax liability is determined by applying the additional tax rate to the proportion of your total realised earnings that corresponds to your balance above the relevant threshold(s).
Scenario A: The $3M to $10M Tier
This scenario applies to an individual whose Total Superannuation Balance (TSB) exceeds $3 million but remains below the $10 million threshold at the end of the financial year (30 June 2027).
|
Component |
Value |
Formula & Calculation |
|---|---|---|
|
Total Superannuation Balance (TSB) |
$4,500,000 |
(At 30 June 2027) |
|
Total Realised Earnings |
$300,000 |
(Attributed by the Fund) |
|
Proportion above $3M |
33.33% |
($4.5M – $3M) / $4.5M = 33.33% |
|
Additional Tax Liability (15%) |
$15,000 |
15% x $300,000 x 33.33% |
In this case, the $15,000 tax is applied to $33.33% of the member’s earnings, resulting in an effective tax rate of 30% on that portion of the earnings.
Scenario B: The Over $10M Tier
This scenario applies to an individual whose TSB exceeds the higher $10 million threshold. The earnings are split and taxed at two different additional rates.
|
Component |
Value |
Formula & Calculation |
|---|---|---|
|
Total Superannuation Balance (TSB) |
$12,900,000 |
(At 30 June 2027) |
|
Total Realised Earnings |
$840,000 |
(Attributed by the Fund) |
|
Proportion above $3M |
76.74% |
($12.9M – $3M) / $12.9M |
|
Proportion above $10M |
22.48% |
($12.9M – $10M) / $12.9M |
|
Tax on Portion $3M–$10M (15% add-on) |
$96,752 |
15% x $840,000 x 76.74% |
|
Tax on Portion Above $10M (Additional 10% add-on) |
$18,883 |
10% x 840,000 x 22.48% |
|
Total Division 296 Tax Liability |
$115,635 |
($96,752 + $18,883) |
While the 1 July 2026 start date provides some lead time, it is crucial to understand that these changes will significantly impact wealth creation strategies for clients.
If your super balance is nearing or exceeds the $3 million mark, we strongly recommend reviewing your current super and non-super assets to determine the optimal structure moving forward.
Disclaimer: The information provided here is general in nature. We are closely monitoring the final legislation and Treasury guidance on the calculation and attribution of realised earnings.
Contact us today to arrange a consultation and discuss how these changes specifically affect your tax planning.
