Division 296: What you need to know

The new rule applies to individuals with total super balances exceeding $3 million. Earnings attributed to the portion above this threshold will be subject to an additional 15% tax, effectively increasing the overall tax rate applied to those balances.

While the measure will only impact a relatively small percentage of Australians, it signals a broader shift in how the superannuation system is evolving, particularly at higher balance levels.

A notable feature of Division 296 is that it applies to earnings rather than withdrawals. This includes unrealised gains, meaning the tax may apply even where assets have not been sold. This approach differs from traditional tax treatments and introduces an additional layer of complexity in how super outcomes are measured.

The liability for the tax sits with the individual rather than the super fund, which further distinguishes it from many existing superannuation tax rules.

Although the immediate impact is limited to those with larger balances, Division 296 represents a structural change that may influence how superannuation is viewed within the broader financial landscape over time.

As the start date approaches, the focus for many will be on understanding how the new rules operate and how they interact with existing superannuation arrangements.