Div 293 and Div 296: The Two Extra Super Taxes Every High-Balance SMSF Member Needs to Understand Australia’s superannuation system remains one of the most tax-effective structures for building retirement wealth but for higher-income earners and members with large balances, there are now two additional taxes that sit on top of the usual 15% fund […]
Div 293 and Div 296: The Two Extra Super Taxes Every High-Balance SMSF Member Needs to Understand
Australia’s superannuation system remains one of the most tax-effective structures for building retirement wealth but for higher-income earners and members with large balances, there are now two additional taxes that sit on top of the usual 15% fund tax: Division 293 and the new Division 296, which commenced on 1 July 2026.
They sound similar. They are both assessed by the ATO personally to the individual. However, they tax completely different things and confusing them could cost you thousands. Here is what every SMSF trustee should know.
Division 293: The tax on money going IN
Division 293 has been with us since 2012. It’s an additional 15% tax on concessional contributions (employer SG, salary sacrifice and deductible personal contributions) for individuals whose income plus concessional contributions exceed $250,000 in a financial year.
How it works:
- Your “Division 293 income” (broadly, taxable income plus reportable fringe benefits and net investment losses) is combined with your concessional contributions.
- If the total exceeds $250,000, you pay an extra 15% on the lesser of your concessional contributions or the amount above the threshold.
- This brings the effective tax on those contributions from 15% to 30%.
- The ATO issues the assessment to you personally. You can pay it from your own pocket or elect to have it released from your super.
Key point: Div 293 is a contributions tax. It applies when money goes into super, regardless of your balance.
Division 296: The tax on what your money EARNS
Division 296 is the new kid on the block. The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill passed Parliament on 10 March 2026 and received Royal Assent on 13 March 2026, with the tax applying to earnings from the 2026–27 financial year onwards
Unlike the original 2023 proposal, the final law:
- Taxes only realised earnings (interest, dividends, rent and realised capital gains) — not unrealised paper gains
- Applies a tiered rate: an extra 15% on the proportion of earnings attributable to balances between $3 million and $10 million, and an extra 10% (total 25%) on the proportion above $10 million
- Indexes both thresholds to CPI ($150,000 increments for the $3 million threshold; $500,000 for the $10 million threshold)
- Measures your Total Superannuation Balance (TSB) at 30 June 2027 for the first year
The formula:
15% × taxable super earnings × proportion of TSB above $3 million plus 10% × taxable super earnings × proportion of TSB above $10 million
Worked example: Runi has a TSB of $4.5 million on 30 June 2027, with $150,000 of fund earnings attributed to her.
- Proportion above $3m = ($4.5m − $3m) ÷ $4.5m = 33.33%
- Div 296 tax = 15% × 33.33% × $150,000 = $7,500
Key point: Div 296 is an earnings tax. It applies to the growth of your super, regardless of your income. And it’s assessed on individual balances, so a couple can hold up to $6 million combined without either spouse being caught.
Side-by-side comparison
Table
| Div 293 | Div 296 | |
| What it taxes | Concessional contributions | Realised fund earnings |
| Trigger | Income + contributions > $250,000 | TSB > $3 million |
| Extra rate | 15% on contributions | 15% ($3m–$10m tier); 25% (above $10m) |
| Effective total rate | 30% on contributions | 30% / 40% on earnings |
| Indexed? | No ($250k fixed) | Yes, to CPI |
| Commenced | 1 July 2012 | 1 July 2026 |
| Assessed to | Individual (ATO notice) | Individual (ATO notice) |
| Pay from super? | Yes, by election | Yes, by election (84 days to pay) |
The part nobody talks about: Div 296 and death benefits
This is where the planning gets real, and it’s the most overlooked dimension of the new tax. The interaction between Div 296 and death benefits can catch estates and surviving spouse’s completely off guard.
- Dying in 2026–27: a free pass
A member’s TSB is deemed to be nil from the date of death. Because the first-year transitional rule only measures TSB on 30 June 2027, anyone who dies on or before 30 June 2027 will never pay Div 296 — regardless of their balance or fund earnings
- Dying from 1 July 2027: one final bill for the estate
From 2027–28 onwards, liability is based on the higher of TSB at the start or end of the year. Since a deceased member’s TSB is nil at death, their opening balance drives the calculation. If a member with $6 million dies in May 2028 and the fund had earnings, the estate receives a Div 296 assessment — even if every dollar of super went directly to beneficiaries and none to the estate
Two traps for executors (LPRs):
- Liquidity conflicts — if the super went to one set of beneficiaries but the tax bill lands on the estate, someone must fund it.
- Timing delays — SMSFs can have until 15 May of the following year to lodge returns, meaning assessments can arrive long after the estate is distributed. The LPR is personally liable if inadequate provision was made. A sensible estimate should be retained before distribution.
- Realised gains on death can inflate the final bill
If the fund sells assets (e.g. property or shares) to pay death benefits, those realised net capital gains count as Div 296 earnings in the year of death, whether the interest was in accumulation or pension phase. A large balance plus a forced asset sale can make for an expensive combination.
- The surviving spouse’s problem
A death benefit pension is included in the recipient’s own TSB. This is where couples who were individually under $3 million suddenly get caught:
- Reversionary nominations count in the survivor’s TSB from the date of death (no 12-month TSB grace period like the transfer balance account). Earnings accrue to the survivor from the date of death.
- Non-reversionary pensions only count from commencement, which can push the TSB impact into the following financial year.
Real example from the technical literature: Ricky dies with a $3 million reversionary pension to Roberto, whose own balance is $1 million. Roberto’s TSB jumps to $4.1 million on 30 June 2028, producing a Div 296 liability of $4,455 in that year. Had the nomination been non-reversionary and the pension commenced after 30 June, Roberto’s liability for that year would have been nil. Conversely, in other scenarios a reversionary nomination reduces the deceased’s estate liability because Div 296 earnings stop accruing for the deceased from the date of death, in one published example saving the estate over $2,000.
There is no one-size-fits-all answer. Reversionary versus non-reversionary nominations now need to be modelled both ways.
What SMSF trustees should do now
- Know both your numbers — your income position (Div 293) and your TSB trajectory (Div 296).
- Get 30 June 2026 valuations right — accurate opening balances underpin everything that follows.
- Consider the CGT cost base reset — SMSFs can elect to reset asset cost bases to market value at 30 June 2026 so only post-commencement gains are captured. It’s opt-in, fund-wide, and the election is due by the 2027 annual return lodgement date
- Review death benefit nominations — reversionary vs non-reversionary vs binding nominations now have Div 296 consequences for both the estate and the survivor.
- Brief your executor — LPRs need to know to provision for a potential Div 296 assessment before distributing the estate.
- Time asset sales carefully — realised gains are now the taxable event; when you sell matters more than ever. Note the ATO will be watching for contrived delays in paying death benefits “as soon as practicable”.
The bottom line
Div 293 taxes what you put in. Div 296 taxes what your super earns. Together, they mark a fundamental shift in how large balances are treated and for SMSF members, the death benefit interaction makes estate planning reviews not just sensible, but essential.
The good news: with the first assessment date still ahead (30 June 2027), there is a genuine planning window. But nominations, deeds, valuations and CGT elections all take time to implement properly.
Need a Div 296 readiness review for your fund? Contact the My SMSF team on 1300 545 516 or submit an enquiry through the contact form at mysmsfproperty.com.au — we’ll review your balance position, nomination strategy and estate plan before the first measurement date.
General information only. This article does not constitute financial product advice or tax advice and has been prepared without taking into account your objectives, financial situation or needs. Division 296 figures reflect legislation as at July 2026 and may change. Speak to your adviser or contact us before acting on anything in this article.
