The $3m super tax (Division 296) explained for members

A new tax on large superannuation balances is coming, and if your total super is heading towards $3 million it is worth understanding. It is often called the Division 296 tax or the $3 million super tax. This article explains the basics in plain terms. Because the fine detail was still being finalised, treat this as a general explanation and check the current rules before acting.

What it is

From the financial year starting 1 July 2026, an extra tax applies to the earnings on the part of your total super balance above $3 million. Your total super balance is, broadly, everything you have across all your super, not just your SMSF. The extra tax is on top of the tax super already pays.

The key thing to understand is that it only applies to the portion above the threshold. If your balance is below $3 million, this tax does not affect you at all. If it is above, only the slice above $3 million is caught, not the whole amount.

How it works at a high level

The tax applies an additional charge to the earnings that relate to the part of your balance over the threshold. There is also a higher tier for very large balances above a second, much higher threshold. Both thresholds are set to increase over time so they keep pace with inflation.

Importantly, this is a tax on you as an individual, worked out from your total super balance, rather than a tax the fund pays directly. The fund’s reporting feeds the calculation, but the assessment comes to you.

Why accurate valuations suddenly matter more

Here is where it connects to running your SMSF. Because the tax is based on your total super balance, and that balance includes the value of your fund’s assets, the year-end value of those assets now matters more than ever for members near or above the threshold. If an asset like a property or an unlisted investment is overvalued, it can push your balance up and increase the tax.

This makes the yearly valuation work your fund already does more important. For members near the threshold, it is worth making sure the fund’s assets are valued accurately and backed by solid evidence each year.

What you might consider

If your balance is approaching the threshold, this is a topic to discuss with a licensed adviser. There are choices to think through, including a one-off opportunity for funds to reset the value base of their assets at a particular date, which can affect future calculations. These are planning decisions that depend on your own circumstances, and they are not something to act on from a general article.

What you do not need to do

If your total super is comfortably below $3 million, you do not need to do anything about this tax. It is aimed at large balances, and most members will not be affected. Keep an eye on your balance over time, but there is no immediate action for the majority of members.

The bottom line

From 1 July 2026, an extra tax applies to the earnings on the part of your total super balance above $3 million, with only the portion above the threshold affected. It is assessed to you as an individual, and it makes accurate year-end valuations of your fund’s assets more important. If your balance is near the threshold, get advice; if it is well below, there is nothing you need to do.

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This article is general information for trustees and members and reflects the position as the measure was being finalised. It is not financial, legal or tax advice. The detailed rules may change, so confirm the current position and get advice from a licensed professional before acting.