Superannuation Advice Adelaide – Division 296, $3 Million and $10 Million Super Rules Explained
Superannuation advice Adelaide: what Division 296 means for high super balances
If you have a total super balance approaching $3 million or $10 million, Division 296 is a proposed federal tax that could significantly change your retirement planning. For South Australian investors seeking superannuation advice in Adelaide, understanding these rules now—while there’s still time to plan—is critical.
Division 296 is proposed legislation that would impose additional tax on superannuation earnings for individuals whose total super balance exceeds specific thresholds. The tax is scheduled to commence on 1 July 2026, with the first assessments issued by the ATO after 30 June 2027 for the 2026–27 financial year.
This isn’t a fund-level tax. It’s assessed personally, based on your combined super across all funds—including SMSFs, industry funds, retail funds and defined benefit schemes.
Consider an Adelaide SMSF trustee with a total balance of $3.5 million, comprising a commercial property in Mawson Lakes and a diversified share portfolio. Under Division 296, the earnings attributable to the $500,000 above the threshold would attract an additional 15% tax, potentially adding thousands to their annual tax bill.
Adelaide-based SMSF trustees, senior professionals, business owners who’ve sold their enterprise, farmers with super-held property, and public sector employees approaching retirement should be reviewing their position now—not waiting until 2026.
What is Division 296 super tax and who in Adelaide is likely to be affected?
Division 296 is a proposed additional personal tax on superannuation earnings linked to the portion of your total super balance that exceeds government thresholds of $3 million and $10 million.
Unlike the standard 15% tax paid by your superannuation fund on investment earnings, Division 296 is assessed at the individual level. It applies across all your super interests combined—whether you have money in an industry fund, retail fund, corporate scheme, or SMSF.
Who in Adelaide is most likely to be affected?
The clients most exposed to Division 296 typically fall into these categories:
Long-term SA public servants with accumulated Super SA benefits approaching or exceeding $1.5–2 million per person
Medical specialists and senior clinicians at major Adelaide hospitals and private practices
Partners in law, accounting, engineering or consulting firms
Business owners who have sold or are planning to sell a business and contribute proceeds to super
Farmers with SMSF-held agricultural or commercial property
Super SA members rolling large defined benefit entitlements into SMSFs or retail funds
Defence industry executives linked to SA’s naval shipbuilding and aerospace sectors
Division 296 applies whether your super is in accumulation phase, pension phase, or a combination of both. The calculation looks at your total superannuation balance (TSB) as at 30 June each year.
This tax is separate from the normal 15% fund tax on earnings and separate from Division 293, which applies an extra 15% tax on concessional contributions for individuals with income above $250,000.
Division 296 thresholds and tax rates – how the $3m and $10m super rules work
The Division 296 framework creates two distinct bands of additional taxation, each with different rates and implications for your financial future.
The $3 million to $10 million band
For the portion of your total super balance between $3 million and $10 million, an additional 15% tax applies to earnings attributable to that slice. When combined with the standard 15% tax paid by your super fund during accumulation, this results in an effective tax rate of up to 30% on those earnings.
The over $10 million band
For the portion of your balance exceeding $10 million, an additional 25% tax applies. This creates an effective tax rate of up to 40% on earnings attributable to that tier.
Threshold indexation
Both thresholds will be indexed to CPI over time. The $3 million threshold increases in $150,000 increments, while the $10 million threshold increases in $500,000 increments. This mechanism slows bracket creep, though it doesn’t eliminate it entirely for investors with strong long-term growth.
A practical example
Consider an Adelaide investor with a total super balance of $4 million at 30 June 2028, generating $200,000 in realised earnings during the 2027–28 year. Under Division 296, the earnings attributable to the $1 million above the $3 million threshold would be subject to the additional 15% tax.
In simplified terms, approximately 25% of their earnings ($50,000) would relate to the above-threshold portion. The Division 296 liability on that portion would be roughly $7,500 (15% of $50,000), payable personally by the investor on top of the fund’s own tax obligations.
The actual calculation involves more detailed apportionment rules, which is why specialist advice matters for accurate modelling.
What counts as “earnings” under Division 296?
Understanding what earnings are included in Division 296 calculations is essential for planning—particularly for Adelaide SMSFs with significant property or concentrated investments.
Under the revised draft rules released in late 2023 and early 2024, only realised earnings count for Division 296 purposes. This includes:
Interest income on cash and fixed income holdings
Dividends from shares and managed funds
Rental income from property investments
Distributions from trusts and managed investments
Realised capital gains when assets are actually sold
Unrealised capital gains are excluded. This was a significant change from earlier proposals that would have taxed paper gains, which raised serious concerns for SMSF trustees holding property in suburbs like Norwood, Glenelg, Unley or the Adelaide Hills.
Why this matters for Adelaide investors
If your SMSF holds a commercial property in Mile End that increases in value from $1.5 million to $1.8 million during a year, but you don’t sell it, that $300,000 gain is not included in Division 296 earnings.
However, if you sell the property and realise a $500,000 capital gain, that gain becomes part of your Division 296 earnings calculation for that year.
Both accumulation and pension phase earnings are included in the calculation. Even though pension phase earnings may be tax-free at the fund level, they’re still counted when determining your Division 296 liability.
Carrying forward losses
If your super interests record negative realised earnings in a particular year—perhaps due to capital losses on share sales or negative net rental after expenses—those losses can be carried forward. They’ll offset future Division 296 earnings, reducing or eliminating future liabilities until the losses are fully absorbed.
This loss carry-forward mechanism is particularly relevant for Adelaide SMSFs with concentrated portfolios that may experience volatile realised returns year to year.
Key timing and transitional rules: 1 July 2026 start date
The timeline for Division 296 creates both urgency and opportunity for Adelaide investors with large super balances. Understanding the key dates is critical for strategic planning.
2024–25 and 2025–26: the planning window
Right now, and through to 30 June 2026, you have a window to review your super structure, contribution strategies, pension arrangements and asset holdings. Decisions made during this period can influence your exposure once Division 296 commences.
30 June 2026: the CGT cost base reset
SMSFs can elect to reset the cost base of certain assets to their market value at 30 June 2026 for Division 296 purposes. This effectively excludes capital gains accrued before the start date from future Division 296 calculations—only gains from 1 July 2026 onward would be captured.
For an Adelaide SMSF holding a warehouse in Wingfield purchased 15 years ago for $400,000 and now worth $1.2 million, this reset could exclude the $800,000 in historic gains from Division 296 entirely.
1 July 2026: Division 296 commences
Subject to the legislation passing Federal Parliament, Division 296 is planned to start on this date. From this point, earnings on above-threshold balances begin accumulating for potential taxation.
30 June 2027: first assessment point
The first Division 296 assessments will be issued by the ATO after 30 June 2027, based on your total super balance and earnings for the 2026–27 financial year.
Transitional rule for year one
For the 2026–27 year only, Division 296 assessments will be based solely on your total super balance at 30 June 2027, ignoring earlier balance movements during that year. This transitional simplification means that decisions you make before 30 June 2027—such as large withdrawals or restructuring—will matter primarily for their impact on your year-end balance.
Adelaide SMSF trustees and high-balance members should be reviewing their position during 2025–26, not just in 2026–27.
How Division 296 interacts with Division 293 and existing super tax rules
Division 296 doesn’t exist in isolation. Many Adelaide professionals with high incomes and large super balances may find themselves subject to both Division 293 and Division 296 simultaneously.
Division 293: taxing contributions
Division 293 is existing legislation that applies an additional 15% tax on concessional contributions for individuals whose income (including certain super contributions) exceeds $250,000 per year. It targets employer contributions, salary sacrifice and personal deductible contributions, bringing the tax on those contributions up to 30% for high earners.
Division 296: taxing earnings
Division 296, by contrast, is proposed legislation targeting earnings on balances above the $3 million and $10 million thresholds. It’s based on total super balance rather than annual income.
The key differences
Division 293 applies to contributions based on taxable income and is already law. Division 296 applies to earnings based on total super balance and remains a proposal with a 1 July 2026 start date.
When both apply
Consider a vascular surgeon in North Adelaide earning $420,000 annually with a total super balance of $3.2 million. They would face Division 293 on their concessional contributions (an extra 15% tax on top of the standard 15%) and Division 296 on the earnings attributable to the $200,000 above the $3 million threshold.
For this client, comprehensive advice needs to address both contribution strategy and balance management. The layering effect makes integrated superannuation and tax planning essential.
Division 296 is assessed personally, but individuals can generally elect to release money from any of their super funds to pay the tax bill—similar to the existing Division 293 release mechanism.
Special considerations for Adelaide SMSF trustees and property investors
Adelaide SMSFs frequently hold direct property—residential investment properties, commercial premises, business real property and rural holdings. Division 296 creates specific planning challenges for these investors.
The CGT cost base reset decision
For SMSFs with long-held property, the option to reset asset cost bases to market value at 30 June 2026 is potentially the single most important Division 296 planning decision. An SMSF holding a medical suite in Kent Town purchased in 2008 for $600,000 and now valued at $1.4 million could reset the cost base to $1.4 million. Future Division 296 calculations would only capture gains above that reset value.
This election requires careful modelling. The reset applies specifically for Division 296 purposes and may interact differently with regular CGT rules at the fund level. Professional advice is essential before making this choice.
Timing property sales
Because Division 296 only taxes realised gains, the timing of property disposals becomes strategically important. A major sale close to 30 June that dramatically increases realised earnings will boost Division 296 liability. Staging sales across financial years, or pulling forward disposals before 1 July 2026, may reduce exposure.
Liquidity planning
Where SMSFs are heavily invested in illiquid Adelaide property, trustees must consider how a future personal Division 296 tax bill will be funded. If 80% of your SMSF is in a single commercial property, you may not have sufficient cash or liquid assets to fund the Division 296 payment without selling the property or drawing from other personal resources.
Building a larger cash buffer, diversifying into more liquid holdings, or planning staged asset sales may all be part of the solution.
Spouse balance equalisation
For couples with unequal super balances, rebalancing through contributions, benefit splitting or re-contribution strategies before Division 296 commences could reduce overall exposure. If one spouse has $4.5 million and the other has $1.5 million, equalising balances could keep both individuals below or closer to the $3 million threshold.
Documentation and valuation
SMSF trustees should ensure asset valuations are current and supportable, particularly for the 30 June 2026 cost base reset. Working with your Adelaide superannuation adviser, accountant and SMSF auditor to model different scenarios before 30 June 2026 is strongly recommended.
How Money Path Can Help You Navigate Division 296
Navigating the complexities of superannuation advice in Adelaide, especially with the upcoming Division 296 changes, can be challenging. Money Path offers expert, tailored financial planning services designed to help you take control of your superannuation and retirement planning.
Our experienced team provides comprehensive financial advice options, assisting you in understanding your investment options, maximising your super contributions, and managing risks associated with large super balances. Whether you are an SMSF trustee, a professional approaching retirement, or someone looking to optimise your wealth management, Money Path supports you every step of the way.
Working with a local Adelaide adviser who understands Division 296, Super SA schemes, SMSF requirements, and South Australian property markets adds practical value. We model your specific circumstances rather than applying generic strategies, ensuring personalised solutions.
Our advice process includes:
An initial enquiry to understand your situation and concerns.
A discovery meeting to gather detailed information about your super, investments, income, and goals.
Transparent scoping and fee agreement discussions covering the cost and scope of advice.
Research and strategy development, including modelling scenarios such as contribution changes, pension timing, property sales, and cost base reset decisions.
Delivery of a tailored Statement of Advice outlining recommendations aligned with your personal financial goals.
Implementation support, including SMSF documentation, contribution adjustments, pension commencements, or asset restructuring.
Ongoing review to adapt your strategy as legislation finalises and your circumstances evolve.
We work closely with you to identify your personal financial goals and create a retirement plan that suits your life and circumstances. Our trusted advice covers estate planning, insurance, pension structuring, and strategies to navigate the uncertainty of changing superannuation laws.
With Money Path, you gain peace of mind knowing you have a dedicated team committed to your financial success. We provide clear, actionable recommendations and ongoing support to help you confidently save, invest, and prepare for a secure retirement.
Act early, not late
The greatest risk is waiting until late 2026 when options narrow and rushed decisions become unavoidable. Acting now gives you time to model scenarios, discuss choices with your family, and implement strategies before the 30 June 2026 cost base reset deadline passes.
Division 296 planning is a process, not a single decision. Starting early allows you to approach retirement with confidence, knowing you’ve considered the range of strategies available and made informed choices to plan your retirement.
If your total super balance is projected to exceed $2.5 million by 30 June 2026—or you’re an SMSF trustee with significant property holdings—contact Money Path today to access expert financial advice tailored to your needs and start your journey towards achieving your financial goals with clarity and confidence.
Strategic planning before 30 June 2026: steps to discuss with an Adelaide superannuation adviser
If your projected total super balance will exceed $2.5 million by 30 June 2026, obtaining personalised superannuation advice during 2025–26 is the prudent approach. Waiting until late 2026 limits your options and forces rushed decisions.
Contribution planning
Review whether continuing to maximise concessional contributions makes sense once your balance approaches or exceeds $3 million. The marginal tax benefit diminishes as Division 293 and Division 296 layer on top of each other. For some investors, directing new savings to non-super structures may be more effective.
Spouse equalisation
If you and your partner have significantly different super balances, explore contribution splitting, spouse contributions or re-contribution strategies to balance exposure. Keeping both individuals closer to or below the $3 million threshold can reduce combined Division 296 liability.
Pension commencement timing
Review when to commence account-based pensions and how to use the transfer balance cap effectively. While Division 296 applies to pension phase earnings, there may still be advantages in optimal pension structuring.
Property and asset sale timing
For SMSFs with direct property, model whether to sell before 1 July 2026 (crystallising gains under current rules), hold and use the cost base reset, or stage sales across future years. The decision depends on your specific asset values, purchase costs and retirement timeline.
The cost base reset choice
Work with your SMSF accountant to determine whether electing the 30 June 2026 cost base reset will reduce long-term Division 296 exposure for your particular assets. This requires current valuations and modelling of different disposal scenarios.
Integrated tax and estate planning
Large super balances interact with estate planning, particularly regarding death benefits tax for adult children, blended family arrangements and potential nomination strategies. A comprehensive advice process should address these intersections alongside Division 296 planning.
Division 296 super tax FAQs for Adelaide investors
What is Division 296 super tax?
Division 296 is proposed Australian legislation that introduces additional personal tax on superannuation earnings for individuals whose total super balance exceeds $3 million. The tax applies at the individual level, not the fund level, and captures earnings across all your super interests combined.
When does Division 296 start?
The proposed commencement date is 1 July 2026, subject to the legislation passing Federal Parliament. The first Division 296 assessments will be issued by the ATO after 30 June 2027 for the 2026–27 financial year.
Does Division 296 apply to pension accounts?
Yes. Both accumulation and pension phase accounts are included in your total super balance calculation. Even though pension phase earnings may be tax-free at the fund level, they’re still counted when determining your Division 296 liability.
Are unrealised capital gains taxed?
No. Under the revised draft rules, only realised earnings are taxed—including interest, dividends, rental income and realised capital gains. This is particularly important for Adelaide SMSF trustees holding direct property that has appreciated significantly but hasn’t been sold.
What happens if my super exceeds $10 million?
Earnings attributable to the portion of your balance above $10 million face an additional 25% tax, resulting in an effective rate of up to 40% on those earnings. The $3 million to $10 million portion attracts the lower 15% additional rate.
How do I pay the Division 296 bill?
Division 296 is a personal tax liability, but you can generally elect to release funds from one or more of your super accounts to pay it—similar to the existing Division 293 mechanism. This is critical for liquidity planning, especially for SMSFs with illiquid property.
Are the $3 million and $10 million thresholds indexed?
Yes. The $3 million threshold is indexed to CPI in $150,000 increments, and the $10 million threshold in $500,000 increments. This reduces bracket creep over time but doesn’t eliminate it entirely.
Can I carry forward Division 296 losses?
Yes. If your super interests record negative realised earnings in a particular year, those losses can be carried forward to offset future Division 296 liabilities.
Should I change my super strategy now?
Not necessarily rushed—but if your balance is approaching $3 million or $10 million, or you’re an Adelaide SMSF trustee with significant property, seeking early specialist advice is essential. The two-year planning window before 1 July 2026 allows time for considered decisions rather than last-minute reactions.
