Just when you thought it was safe to wade back into superannuation waters, the Government has released an updated version of Division 296 tax.

For those who missed the first round this additional tax targets individuals with a Total Superannuation Balance (TSB) above $3 million. After strong industry feedback, the rules have undergone a significant redesign.

The Good News: "Paper Profits" Are Out

One of the most controversial features of the original proposal – the taxing unrealised capital gains has been scrapped. That means you won’t be taxed on increases in asset values that haven’t been realised or converted into actual cash and that you won’t have to sell a slice of your investment property or farm just to pay tax on a "paper profit" that hasn’t actually hit your bank account yet.

The revised version now focuses solely on realised earnings, including income and capital gains from sold assets. This brings it more in line with how the rest of the tax system already operates.

The Fine Print:

While the rework removes the biggest pain point, it still introduces a few new considerations worth noting:

• A $3 - $10 million tier: Super balances in this range will pay an extra 15% tax on earnings.
• A new $10 million tier: Super balances above $10 million will now face a sharper extra tax 10% (bringing the total to an extra 25%) on earnings above that threshold,
• Indexed thresholds: Both the $3 million and $10 million thresholds will now be indexed to inflation, avoiding the “bracket creep” that would otherwise draw more members in over time.
• A 2026 start date: The rules are meant to kick in from 1 July 2026, with the first important date on 30 June 2027.
• It’s still a personal tax: Division 296 remains a personal tax liability, not a fund-level one. The ATO will issue the notice to you directly, though you can elect to have your SMSF pay it on your behalf. 

Time to Prepare: Is Your SMSF Ready for 2026?

While July 2026 might sound comfortably distant, it’s closer than it seems when it comes to strategic super planning. Reviewing your asset mix, valuation policies, and contribution strategies now could have a major impact on your final tax outcome.

If you’d like to understand how these new thresholds could affect your personal situation, we’re here to help. Contact our team to ensure your retirement savings stay right where they belong, working for you.