Division 296 is now law. It can add tax for an individual whose total superannuation balance exceeds $3 million and who has positive taxable superannuation earnings. The first assessment year is 2026-27, but records from 30 June 2026 can matter for the transitional CGT calculation.
The enacted rules differ from the earlier proposal that many articles still describe. They use fund taxable income concepts rather than taxing every change in market value. The 2026 amending Act and the Division 296 provisions in the Income Tax Assessment Act 1997 are the primary sources.
If your balance may be near a threshold, use this article to prepare questions and records. Ask an SMSF tax adviser to calculate the member-level result for your fund.
The two thresholds
For 2026-27, the large superannuation balance threshold is $3 million and the very large balance threshold is $10 million. The legislation indexes both thresholds for following years.
The tax has two components:
- 15% applies to the taxable superannuation earnings attributed to the share of the relevant balance above $3 million.
- A further 10% applies to the component attributed to the share above $10 million.
The thresholds apply to an individual's total superannuation balance across their super interests. They do not apply once to each SMSF or account.
Realised fund earnings replace the old unrealised-gain proposal
The final law starts from an SMSF's relevant taxable income or loss, with statutory adjustments for contributions, exempt current pension income, non-arm's length income and other items. This means a rise in the market value of an unsold listed share does not, by itself, enter the fund-earnings amount.
Sales, dividends and other amounts that affect taxable income can matter. The result is allocated to members under rules for relevant superannuation earnings. That allocation can be more complicated than dividing fund profit by member balances.
Do not use the original balance-change formula for a 2026-27 estimate. Also avoid describing Division 296 as a new fund tax rate on every dollar of earnings. The ATO assesses a member-level liability using the statutory proportions and attributed earnings.
A simplified $4 million example
Assume one member has a $4 million total superannuation balance at the relevant reference point. Also assume the member has $200,000 of positive total superannuation earnings after the enacted calculations and no excluded interest or special adjustment.
The balance proportion above $3 million is:
($4,000,000 - $3,000,000) / $4,000,000 = 25%
Taxable superannuation earnings are therefore $50,000 in this simplified example. Applying the 15% Division 296 rate produces $7,500.
This example teaches the threshold proportion only. It does not calculate the SMSF's taxable income, member attribution, pension adjustments or transitional CGT treatment. Those inputs must come from the fund's records and the enacted rules.
Why active traders need parcel records
Frequent disposals can increase the amount of realised income and capital gains that flows into the fund calculation. Each sale should connect to an acquisition parcel, brokerage and any corporate action that changed the cost base.
Keep these records for 2026-27:
- opening and closing member and total superannuation balances
- the SMSF tax return workpapers and financial statements
- acquisition and disposal confirmations by parcel
- realised capital gain and loss calculations
- dividends, distributions, interest and foreign withholding
- contributions, rollovers, withdrawals and benefit payments
- pension-phase and exempt current pension income workpapers
- any records supporting a Division 296 transitional CGT adjustment
For the wider audit handover, use the SMSF audit preparation checklist. It connects trade history to cash, income and closing holdings.
Transitional CGT treatment needs fund-specific advice
The law contains adjustments intended to exclude pre-commencement gains from Division 296 fund earnings. Regulations prescribe factors and methods for parts of that calculation. The mechanism is more detailed than a general choice to reset every SMSF asset to its 30 June 2026 market value.
Ask your adviser which transitional rule applies to each asset and what valuation evidence the fund needs. Do this before finalising the 2026-27 tax workpapers. Do not sell, retain or transfer an investment based on an old summary of the proposal.
Questions for your SMSF accountant
- Which of my super interests count toward my total superannuation balance?
- Which start or end balance drives the proportion for this year?
- How will the fund calculate Division 296 fund earnings and allocate them to me?
- Which contributions, pension amounts and withdrawals need adjustments?
- Which transitional CGT treatment applies to assets held before commencement?
- What data will the fund report, and what will I need when the ATO issues an assessment?
- Should the fund keep extra liquidity for a release authority or should I plan to pay personally?
Division 296 FAQs for traders
Does a $3.1 million balance mean all fund earnings face another 15%?
No. The law calculates a proportion above the threshold, then applies it to positive superannuation earnings worked out under Division 296. The fund and member calculations come before the additional rate.
Does an unrealised share-price rise create Division 296 fund earnings?
An unsold market-value increase does not, by itself, enter the realised fund-earnings starting point. It can still affect total superannuation balance and therefore whether a threshold is crossed or which proportion applies.
Can a member avoid the tax by splitting money between two funds?
The threshold uses the individual's total superannuation balance across super interests. Moving an amount between funds does not create a separate $3 million threshold.
When might the first ATO assessment arrive?
The first liability relates to 2026-27 and needs year-end fund and balance information. Ask your adviser when the ATO is likely to issue the member assessment and what payment or release-authority process applies.
Keep tax separate from the trade decision
Tax can change an after-tax result, but it does not repair a weak entry or justify holding beyond a risk limit. Record the investment reason for each decision, then give the adviser complete tax inputs. The CGT reports guide for active traders explains how to prepare a parcel-level handover.
Swingfolio can organise trade dates, prices, quantities, fees and notes. During an active trial, you can import a CSV and review it before saving. Reconcile the export to broker and fund records before using it as an accountant workpaper.
Start the 30-day trial to organise the trading history your adviser will need.
This article is general information and not tax advice.