$3 million super balance tax is now law — it’s not that big of a deal
Key takeaways
- The tax on super balances over $3 million is now in effect. It's called Division 296.
- You'll pay a 15% tax on the proportion of your fund's earnings that exceeds $3 million (not the total amount).
- What's next: It's a relatively small tax that affects less than 100,000 Australian superannuation accounts.
Several major changes to superannuation have come into effect this month, including higher contribution caps, payday super, and the Division 296 tax.
This is a tax that applies to super balances that exceed $3 million. Treasury estimates suggest around 80,000 super accounts held more than $3 million in 2025.
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How the Division 296 tax works
The tax applies to super funds with a balance of more than $3 million. At that point, a 15% tax applies. But only to the portion of your taxable super earnings that exceed the $3 million threshold.
It's a little complicated, but in short, that 15% tax applies to your fund's earnings (the investment returns your balance generates), in proportion to how much of your balance exceeds $3 million.
Example
Your super balance is $3.1 million by the end of June 2027. Your fund earned $150,000 in the last 12 months.
So the Division 296 tax only applies to the $150,000. And only as a proportion of your overall balance that exceeds $3 million.
Which in this instance is only $100,000. As a proportion of your total balance, that's 3.23%.
Now let's look at the fund's earnings. $150,000. So we need to find 3.23% of this figure, which is $4,838.
And this is the amount that gets taxed at 15%. All told, it's a tax bill of around $725.
It's a bigger tax for the very largest super balances
Now of course, the more money you have in your balance the more tax you pay. Balances above $10 million get with a further tax.
If your balance was $4 million and your investments earned $300,000, you'd pay $11,250.
That's a lot more. But it's still the most tax-effective $300,000 you could ever earn.
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