Division 296 fine print requires education

After announcing amendments late last year, on February 11 Treasurer Jim Chalmers introduced the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 in the lower house.

- Riddhima Talwani

Liam Shorte Sonas Wealth

While the industry broadly welcomes key changes, it warns practitioners must be aware of the fine print.The tabled bill essentially clubs two of thegovernment's high agenda items together: the Division 296 tax and increasing the Low-Income Superannuation Tax Offset (LISTO). Both measures are aimed at making the super system more equitable.

Under the revised Division 296 tax, superannuation balances between $3 million and $10 million will be taxed at an effective rate of 30%. Super balances over $10 million will face a 40% tax rate. The tax is now limited to realised gains and indexed to inflation - two major wins.

However, how the total superannuation balance (TSB) is calculated for the purpose of the tax remains a bone of contention.

Under the bill, an individual will be taxed on either their TSB at the end of the year or just before the start of the year, whichever is greater. However, the government has made a concession for the first income year 2026-27, where the individual will only be taxed on the TSB at the end of the year.