Division 296 Tax Calculator & Guide: Calculate Your Super Tax (Australia)

Division 296 Tax Calculator & Guide: Calculate Your Super Tax (Australia 2026)

Division 296 is Australia's new tax on superannuation earnings for high-balance accounts starting 1 July 2026. If your Total Super Balance (TSB) exceeds $3 million, you'll face additional tax on your super earnings.

This guide explains how Division 296 works, shows you how to calculate your tax liability, and provides strategies to minimize your tax burden.

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Table of Contents

1. What is Division 296 Tax?
2. Who is Affected?
3. How Division 296 Works
4. Two-Tier Tax Structure
5. Calculation Examples
6. How to Use the Calculator
7. Tax Minimization Strategies
8. SMSF Considerations
9. CGT Cost Base Election
10. Common Questions

What is Division 296 Tax? {#what-is}

Division 296 is an additional tax on superannuation earnings for individuals with Total Super Balances (TSB) above $3 million.

Key Details

Commencement: 1 July 2026
First Assessment: Based on TSB at 30 June 2027
Tax Type: Additional tax on superannuation earnings
Applies to: Total super balance across ALL funds

What Changed (December 2025 Revision)

The government revised the original proposal in October-December 2025:

Major improvement: The revised Bill excludes unrealised gains (paper profits), making the tax more fair and manageable.

Who is Affected by Division 296? {#who-affected}

✅ Division 296 Applies If:

• Your TSB > $3 million at 30 June
• Applies to total across ALL super funds
• Both accumulation and pension phase
• Applies whether in SMSF, industry fund, or retail fund
• Individual assessment (not per fund)

❌ Division 296 Does NOT Apply If:

• Your TSB < $3 million
• Certain defined benefit interests (special rules)
• Some personal injury compensation contributions

Real-World Scenarios

Scenario 1: Single SMSF Member

• You have $5 million in your SMSF
• Result: Division 296 applies

Scenario 2: Multiple Super Accounts

• $2M in industry fund
• $1.5M in SMSF
• Total TSB: $3.5M
• Result: Division 296 applies (all funds count)

Scenario 3: Couple with Separate Accounts

• Partner A: $4M super
• Partner B: $2M super
• Result: Only Partner A affected (assessed individually)

Scenario 4: Pension Phase

• $6M all in pension account
• Result: Division 296 still applies (phase doesn't matter)

Scenario 5: Just Under Threshold

• $2.9M super balance
• Result: Not affected (but watch growth!)

How Division 296 Works {#how-it-works}

Step-by-Step Process

Step 1: Determine Your TSB

• 2026-27 (transition year): Use TSB at 30 June 2027 only
• 2027-28 onwards: Use HIGHER of TSB at start or end of year

Step 2: Calculate Which Tier(s) Apply

• Below $3M: No Division 296 tax
• $3M - $10M: Tier 1 (additional 15% tax)
• Above $10M: Tier 2 (additional 25% tax)

Step 3: Determine Your Realised Earnings Include:

• Interest income
• Dividends (franked and unfranked)
• Rental income from super-owned property
• Realised capital gains (from sold assets)
• Distributed trust income

Exclude:

• Unrealised capital gains (assets still held)
• Paper profits
• Valuation increases

Step 4: Proportionally Allocate Earnings Earnings are allocated based on which portion of your TSB falls into each tier.

Step 5: Calculate Tax

• Base fund tax: 15% on all earnings
• Division 296 additional tax: 15% or 25% on allocated earnings

Two-Tier Tax Structure Explained {#two-tier}

Threshold Breakdown

How Tiers Work Together

If your TSB is $12 million, it's split into three segments:

1. Below $3M: $3M (no Division 296 tax)
2. $3M-$10M: $7M (Tier 1 - additional 15%)
3. Above $10M: $2M (Tier 2 - additional 25%)

Proportions:

• Tier 1: $7M / $12M = 58.33%
• Tier 2: $2M / $12M = 16.67%

Threshold Indexation

Both thresholds are indexed annually to CPI:

$3 Million Threshold:

• Indexed in $150,000 increments
• Example: With 2.5% inflation, could reach $3.15M-$3.3M within a few years

$10 Million Threshold:

• Indexed in $500,000 increments
• Example: Could reach $10.5M within a few years

Why this matters: Your tax burden may decrease over time if your balance grows slower than inflation.

Calculation Examples {#examples}

Example 1: $4 Million Balance (Tier 1 Only)

Given:

• TSB: $4,000,000
• Realised earnings: $200,000

Calculation:

1. TSB above threshold: $4M - $3M = $1M
2. Proportion in Tier 1: $1M / $4M = 25%
3. Tier 1 earnings: $200,000 × 25% = $50,000
4. Base fund tax: $200,000 × 15% = $30,000
5. Tier 1 additional tax: $50,000 × 15% = $7,500
6. Total tax: $30,000 + $7,500 = $37,500
7. Effective rate: $37,500 / $200,000 = 18.75%

Without Division 296: Would pay only $30,000 (15%)
Additional cost: $7,500 (25% increase)

Example 2: $8 Million Balance (Tier 1 Only)

Given:

• TSB: $8,000,000
• Realised earnings: $400,000

Calculation:

1. TSB above threshold: $8M - $3M = $5M
2. Proportion in Tier 1: $5M / $8M = 62.5%
3. Tier 1 earnings: $400,000 × 62.5% = $250,000
4. Base fund tax: $400,000 × 15% = $60,000
5. Tier 1 additional tax: $250,000 × 15% = $37,500
6. Total tax: $60,000 + $37,500 = $97,500
7. Effective rate: $97,500 / $400,000 = 24.375%

Without Division 296: $60,000
Additional cost: $37,500 (62.5% increase)

Example 3: $12 Million Balance (Both Tiers)

Given:

• TSB: $12,000,000
• Realised earnings: $600,000

Calculation:

1. TSB segments:
   • Tier 1 ($3M-$10M): $7M
   • Tier 2 ($10M+): $2M
2. Proportions:
   • Tier 1: $7M / $12M = 58.33%
   • Tier 2: $2M / $12M = 16.67%
3. Allocated earnings:
   • Tier 1: $600,000 × 58.33% = $350,000
   • Tier 2: $600,000 × 16.67% = $100,000
4. Taxes:
   • Base fund tax: $600,000 × 15% = $90,000
   • Tier 1 additional: $350,000 × 15% = $52,500
   • Tier 2 additional: $100,000 × 25% = $25,000
5. Total tax: $90,000 + $52,500 + $25,000 = $167,500
6. Effective rate: $167,500 / $600,000 = 27.92%

Without Division 296: $90,000
Additional cost: $77,500 (86% increase)

Example 4: $15 Million Balance (Both Tiers)

Given:

• TSB: $15,000,000
• Realised earnings: $750,000

Calculation:

1. TSB segments:
   • Tier 1 ($3M-$10M): $7M
   • Tier 2 ($10M+): $5M
2. Proportions:
   • Tier 1: $7M / $15M = 46.67%
   • Tier 2: $5M / $15M = 33.33%
3. Allocated earnings:
   • Tier 1: $750,000 × 46.67% = $350,000
   • Tier 2: $750,000 × 33.33% = $250,000
4. Taxes:
   • Base fund tax: $750,000 × 15% = $112,500
   • Tier 1 additional: $350,000 × 15% = $52,500
   • Tier 2 additional: $250,000 × 25% = $62,500
5. Total tax: $112,500 + $52,500 + $62,500 = $227,500
6. Effective rate: $227,500 / $750,000 = 30.33%

Without Division 296: $112,500
Additional cost: $115,000 (102% increase - more than double!)

How to Use the Calculator {#calculator-guide}

Our Division 296 Tax Calculator makes it easy to estimate your tax liability.

Input Fields

1. Financial Year

• Select the year for calculation
• 2026-27 is transition year (special rules)

2. Total Super Balance (TSB)

• Start of year TSB (for 2027-28+)
• End of year TSB (30 June)
• Calculator uses higher value (or end-only for 2026-27)

3. Realised Earnings

• Total interest, dividends, rent, realised gains
• Do NOT include unrealised gains

4. Advanced Options (Optional)

• Expected return rate (for projections)
• Expected CPI inflation (for threshold indexation)
• Generates 5-year projection

Understanding Results

Division 296 Tax: Additional tax beyond base 15% fund tax

Effective Tax Rate: Total tax as % of earnings (includes base + Division 296)

Tax Breakdown: Shows how much tax in each tier

5-Year Projection: Future tax liability with growth and indexed thresholds

Tax Comparison: What you'd pay with vs without Division 296

Tax Minimization Strategies {#strategies}

Strategy 1: Reduce TSB Before 30 June

Since TSB at 30 June determines your liability:

Actions:

• Make lump sum withdrawals before year-end
• Increase pension payments in final month
• Time withdrawals strategically

Example: Reduce from $3.2M to $2.9M before 30 June 2027

• Saves: Entire Division 296 tax for that year
• Amount: Could be $5,000-$10,000+ saved

Considerations:

• Access rules (age, conditions of release)
• Re-contribution limits
• Overall retirement planning

Strategy 2: Spouse Contribution Splitting

If one spouse above threshold, other below:

Before:

• Partner A: $5M (pays Division 296 tax)
• Partner B: $2M (no Division 296)

After Rebalancing:

• Partner A: $3.5M (pays less Division 296)
• Partner B: $3.5M (pays less Division 296)

Total tax savings: Significant, because both are closer to threshold

How to implement:

• Contribution splitting
• Recontribution strategy
• Multi-year approach

Legal requirements:

• Must be genuine rebalancing
• Contribution caps apply
• Age limits for certain contributions

Strategy 3: Manage Timing of Asset Sales

Only realised gains are taxed under Division 296.

Strategy:

• Hold appreciated assets longer
• Time sales to years with lower TSB
• Offset gains with realised losses
• Consider selling in years when you're below threshold

Example:

• 2027: TSB $3.5M, defer sale of shares with $200K gain
• 2028: Make withdrawal, TSB drops to $2.9M, sell shares
• Saves: Division 296 tax on $200K gain (could be $7,500+)

Strategy 4: CGT Cost Base Election (SMSFs)

SMSFs can elect to reset CGT cost base to market value at 30 June 2026.

Benefit: Reduces Division 296 tax on pre-July 2026 gains

Example:

• Share bought for $500K in 2020
• Worth $1M at 30 June 2026
• If elected: cost base becomes $1M
• Sell in 2027 for $1.1M
• Division 296 taxed on $100K gain (not $600K)

Considerations:

• Irrevocable decision
• Applies to all fund assets
• Requires detailed records
• Professional advice essential

Strategy 5: Asset Allocation Review

High-growth, low-income assets:

• Growth shares (low dividends)
• Investment property (capital growth focus)
• Unrealised gains not taxed under Division 296

High-income assets:

• Dividend-paying shares
• Term deposits
• Rental properties (high yield)
• Fully taxed under Division 296

Strategic adjustment:

• Shift income-producing assets outside super
• Keep growth assets inside super
• Balance tax efficiency with investment goals

Strategy 6: Use Non-Super Structures

For balances well above thresholds:

Consider:

• Family trusts
• Investment companies
• Direct personal ownership
• Hybrid structures

Compare tax rates:

• Division 296: Up to 40% on super earnings
• Personal marginal rate: 45% + 2% Medicare
• Company tax: 25-30%
• Trust distributions: Varies

Seek professional advice on optimal structure for your situation.

SMSF-Specific Considerations {#smsf}

Actuarial Certification

SMSFs may require actuarial certification to attribute earnings to individual members.

When required:

• Multiple members
• Complex investment structures
• Segregated assets
• Pension and accumulation mix

Similar to: ECPI (Exempt Current Pension Income) actuarial certificates

Cost: Typically $300-$800 annually

Earnings Attribution

For SMSFs, earnings must be attributed to each member based on:

• Proportionate method
• Segregated method (if applicable)
• Actuarial method (if required)

Complex scenarios:

• One member in pension, another in accumulation
• Different contribution patterns
• Reserve accounts
• Legacy defined benefit interests

Defined Benefit Pensions in SMSFs

Special rules may apply for:

• Legacy defined benefit pensions
• Hybrid structures
• Allocated pensions vs defined benefit

Requires specialist advice from SMSF actuary or advisor.

Compliance Requirements

SMSF trustees must:

• Maintain detailed records
• Track realised vs unrealised gains
• Document CGT cost base elections
• Obtain actuarial certificates (if required)
• Report earnings to ATO
• Ensure timely payment

Penalty for non-compliance: ATO penalties and interest charges

CGT Cost Base Election Details {#cgt-election}

What is It?

An optional election for SMSFs to reset CGT cost base to market value at 30 June 2026.

Why It Exists

To ensure Division 296 only taxes post-1 July 2026 gains, not gains that occurred before the law commenced.

How It Works

Without election:

• Asset bought 2020 for $500K
• Sold 2028 for $1.2M
• Division 296 taxed on full $700K gain

With election:

• Same asset, same dates
• Cost base reset to $900K (30 June 2026 value)
• Sold 2028 for $1.2M
• Division 296 taxed on only $300K gain
• Saves Division 296 tax on $400K

Key Rules

1. Irrevocable: Once elected, can't be reversed
2. All assets: Applies to all CGT assets in fund
3. Record-keeping: Must obtain valuations at 30 June 2026
4. Division 296 only: Doesn't affect normal fund CGT
5. Fund-level: Election for entire fund, not per member

Should You Elect?

✅ Elect if:

• Significant unrealised gains pre-July 2026
• Likely to sell assets in coming years
• TSB likely to stay above $3M
• Assets have appreciated substantially

❌ Don't elect if:

• Recently acquired assets (little pre-2026 gain)
• Unrealised losses on some assets
• Planning to hold assets long-term
• Uncertain about future sales

Get professional advice: This is a complex, one-time decision with long-term consequences.

Common Questions About Division 296 {#faq}

How do I know my exact TSB?

Your super fund(s) report your TSB to the ATO annually. You can:

• Check myGov account
• Request from each super fund
• Use super consolidation tools

TSB includes all Australian super funds you're a member of.

What if I'm overseas?

Division 296 applies based on your super balance, regardless of tax residency. Even if you're a non-resident for tax purposes, Division 296 may apply to your Australian super.

Seek international tax advice if you're non-resident with large super balance.

Can I appeal my assessment?

Yes. If you receive a Division 296 assessment you believe is incorrect:

• Review calculation details
• Check TSB and earnings figures
• Lodge objection if necessary
• Seek professional review

Time limits apply for objections (typically 2-4 years).

What about insurance in super?

Insurance proceeds paid to your super fund may:

• Increase your TSB
• Generate "earnings" (depending on structure)
• Affect Division 296 liability

Personal injury compensation may have exemptions. Seek advice for complex situations.

Does Division 296 apply in pension phase?

Yes. Division 296 applies to total super balance regardless of:

• Accumulation or pension phase
• Account-based pension or transition to retirement
• Allocated pension or other structures

The only exemption is being below the TSB threshold.

What if I die during the year?

Under revised rules:

• If you die and TSB at start of year > $3M, Division 296 applies for the portion of the year to your death
• Exception: 2026-27 transition year (uses end-of-year TSB only, so death before 30 June 2027 = no Division 296)

Death benefits paid to beneficiaries may have separate tax treatment.

Professional Advice is Essential

Division 296 is complex. You should seek professional advice if:

✅ Your TSB is close to $3 million (within $500K)
✅ You have multiple super funds
✅ You're an SMSF trustee
✅ You have defined benefit interests
✅ You're considering the CGT cost base election
✅ You want to minimize Division 296 tax
✅ You're planning retirement in the next 5 years
✅ You have complex investment structures

Advisors to consult:

• Financial planner (retirement strategy)
• Tax accountant (tax planning)
• SMSF specialist (SMSF compliance)
• SMSF actuary (if required)
• Estate planning lawyer (for death benefit planning)

Use Our Free Calculator

Ready to calculate your Division 296 tax liability?

Calculate Your Division 296 Tax Now →

Features:

• Instant calculations
• Two-tier system
• 5-year projections
• Indexed thresholds
• Tax breakdowns
• Comparison charts

Related Resources

• Division 296 Tax Calculator - Free calculator tool
• Division 296 Tax: Complete Guide - In-depth analysis

Disclaimer: This article is based on the revised Division 296 legislation (December 2025). Final regulations are still being developed. Information is for educational purposes only and should not be relied upon for tax planning without professional advice. Consult a qualified financial advisor or tax professional for personalized guidance.

Last Updated: January 12, 2026
Author: TaxPoynt Team