With the 2026 Federal Election over, it appears that the Government with the support of the Greens will pass into Law their proposed Division 296 Tax.

It is important to note – the Division 296 legislation has not passed through Parliament yet so is not currently in place. It is expected to become Law, but the eventual legislation passed may differ to the Legislation as currently proposed.. The information below is based on what is currently known about the proposed legislation but should not be relied on to make decisions. Please seek advice on potential impacts the eventual Division 296 legislation might have on your circumstances before acting.

Division 296 Tax – What is it?

Division 296 introduces a new 15% tax on earnings attributable to the portion of your Total Superannuation Balance (TSB) above $3 million.

• This is in addition to the current 15% tax in the accumulation phase.
• It applies to individuals, not funds — so each person is assessed separately across all super accounts, including SMSFs and APRA funds.

Who is affected?

• Anyone with a TSB over $3 million at the end of a financial year (starting 30 June 2026).
• The tax only applies to earnings on the excess over $3 million.

When does it start?

• From 1 July 2025, with the first assessments issued in the 2026–27 financial year.

How is the Tax Calculated?

It is not based on actual earnings like interest or dividends. Instead, it’s calculated on a formula that captures unrealised gains as well:

➕ Formula for “Earnings”:

Earnings = TSB (End of Year) – TSB (Start of Year)
– Net Contributions + Withdrawals

• This includes capital gains/losses, even if assets weren’t sold.

Tax Calculation:

Tax = 15% × Earnings × (Proportion of TSB > $3M)

Example:

Item	Value
TSB at 30 June	$4 million
TSB at 1 July	$3.5 million
Net contributions	$100,000
Net earnings	$400,000
Proportion over $3M	($4M – $3M) / $4M = 25%
Tax	15% × $400,000 × 25% = $15,000

Payment Options

• You can pay from your personal funds, or
• Elect to have it released from your super (similar to Division 293 tax).

What it doesn’t do:

• It doesn’t affect the Transfer Balance Cap (currently $1.9 million).
• It doesn’t change existing super tax rates on income inside the fund.
• It doesn’t apply until your total balance exceeds $3 million.

Why It Matters

• It broadens the tax base by including unrealised gains — a departure from normal tax principles.
• If your TSB drops back below the $3million threshold – ie in the following year your unrealised gains have reduced due to the asset value reducing – you do not get the tax back you paid on the unrealised gain in the previous year.
• It creates an incentive to review your asset mix, and possibly diversify outside super once above the threshold.
• Estate and retirement planning strategies may need significant revision.

How can Curve Wealth help?

Tax Strategy & Optimisation

• Model your tax exposure under the new rules.
• Help you minimise the tax by adjusting investment allocations or shifting assets outside super.
• Strategise withdrawals or re-contributions to reduce taxable components and estate tax.
• Advise on capital gains tax timing (e.g., realising assets before vs. after the new rules start).

Structuring Wealth Outside Super

If you’re above the $3M cap, Curve Wealth can help you:

• Set up or manage structures like family trusts, companies, or investment bonds to grow wealth tax-effectively outside super.
• Compare the after-tax performance of these alternatives.
• Understand the trade-offs (e.g., loss of super’s asset protection vs. more flexible access).

Investment Strategy & Asset Allocation

Curve Wealth can ensure your investment strategy aligns with:

• Your goals and risk tolerance, especially as you approach or are in retirement.
• The new tax implications (e.g., growth vs income assets inside super).
• Market conditions and diversification principles.
• Liquidity needs, particularly if you have a SMSF which holds illiquid assets like property.

Pension vs Accumulation Planning

If you’re eligible to start a retirement phase pension, Curve Wealth can:

• Maximise your tax-free earnings (in pension phase).
• Set up account-based pensions and manage transfer balance caps ($1.9M from July 2023).
• Coordinate drawdowns strategically for tax and Centrelink purposes.

Estate Planning Integration

Estate planning is crucial. Curve Wealth can:

• Ensure your death benefit nominations are up to date and tax-efficient.
• Reduce death benefit tax for non-dependent beneficiaries.
• Use strategies like re-contribution to convert taxable components to tax-free.

For SMSF Trustees – Compliance & Risk Management

If you are a Trustee of a SMSF – Curve Wealth can help you:

• Keep your SMSF compliant with current and upcoming rules.
• Monitor your Total Superannuation Balance (TSB) for contribution eligibility and tax exposure.
• Help you avoid breaches (e.g., over-contributions, related-party transactions).

It is important to note – the Division 296 legislation has not been passed through Parliament yet so is not yet Law, although it is expected to become Law.

Give us a call at Curve Wealth on 03 9588 9000 to arrange a meeting to understand more about how the Division 296 rule may impact you and how we might be able to help you avoid paying unnecessary tax