Better Targeted Super Concessions (Division 296 tax)

The Federal Government has enacted a new tax, known as Division 296 tax, which will impose an additional tax on certain super-related earnings for individuals with a total superannuation balance (TSB) above $3 million effective from 1 July 2026.

While the legislation has passed, key elements of the design as it relates to CSC’s defined benefit schemes are still being finalised.

What's changing

• Two thresholds
  $3 million and $10 million, both indexed
• A focus on realised earnings
  Consistent with existing income tax concepts.
• Tiered additional tax rates
  The earnings on the portion of a super balance that is above $3 million and up to $10 million will be taxed at 30% (additional 15%). The earnings on the portion that exceeds $10 million will be taxed at 40% (additional 25%). These higher rates apply only to the earnings on each relevant portion of the balance, not the entire account.

From 1 July 2026, if an individual’s TSB at the end of the financial year exceeds the large super balance threshold (LSBT) of $3 million for the 2026/27 financial year (but is less than $10 million), they will be subject to Division 296 tax of 15% on the proportion of earnings relating to their TSB that exceeds the LSBT.

Additionally, if an individual’s TSB at the end of the financial year exceeds the very large super balance threshold (VLSBT) of $10 million for the 2026/27 financial year, they will be subject to additional Division 296 tax of 10% on the proportion of earnings relating to their TSB that exceeds the VLSBT.

Find more details on the dedicated ATO Division 296 webpage. 

Also as part of the new law, from 1 July 2027 the LISTO income threshold will increase from $37,000 to $45,000 matching the top of the second income tax bracket. The maximum payment will also increase to $810 to account for recent increases in the Superannuation Guarantee rate.