Two key Bills have passed Parliament recently that will mean significant changes to Australia's superannuation system that will reshape how high-balance accounts are taxed and boost support for low-income earners.
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Division 296 tax
The new Division 296 tax, commencing 1 July 2026, targets earnings on large superannuation balances through a two-tiered system for earnings on balances exceeding $3 million:
- the current 15% tax rate remains for earnings on balances up to $3 million;
- earnings on the super portion between $3 million and $10 million will be taxed at an effective 30% rate; and
- earnings on amounts above $10 million will face a 40% effective tax rate.
These thresholds will be CPI indexed to keep pace with inflation. The new tax applies only to future realised earnings, not unrealised capital gains on unsold assets.
Importantly, for the first year only, liability is determined based on your total super balance at 30 June 2027, rather than at the start of the year.
Total super balance calculations
The law also introduces a “total superannuation balance (TSB) value” concept, with each superannuation interest having its own TSB value. Your total TSB becomes the sum of all these values across your Australian superannuation interests an applies from 1 July 2026.
Low Income Superannuation Tax Offset (LISTO) increases
From 1 July 2027, the maximum LISTO increases from $500 to $810, while the eligibility threshold rises from $37,000 to $45,000.
These changes represent the most significant superannuation tax reforms in years. If you have a large superannuation balance, the window before 30 June 2027 provides time to consider your options. Low-income earners will benefit from enhanced LISTO support from 2027.
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