Division 296 has passed parliament. If your super balance is above or close to $3 million, you need a plan.

After years of debate, the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 passed the Senate on 10 March. Division 296 is law. It takes effect from 1 July 2026.

For anyone with a Total Super Balance above $3 million, the rules around how your superannuation earnings are taxed have fundamentally changed. And there are planning opportunities available now that won’t be around forever.

What Division 296 actually does

Until now, superannuation earnings have been taxed at a flat 15% inside the fund. Division 296 introduces a tiered system based on your Total Super Balance:

$3 million to $10 million: An additional 15% tax on earnings attributable to the portion above $3 million. That brings the effective rate on those earnings to 30%.

Above $10 million: An additional 25% tax on earnings attributable to the portion above $10 million. That’s an effective rate of 40% on those earnings.

Both thresholds are indexed to CPI.

There is a capital gains adjustment written into the legislation. The additional tax only applies to earnings from 1 July 2026 onwards. Anything that accumulated before that date gets carved out. The formal election to lock that in can be lodged as late as the 2027 tax return due date (potentially May 2028), but the analysis that drives the decision needs to happen before 30 June 2026. More on why below.

30 June 2026 and 30 June 2027: the dates that matter

Two deadlines are driving the planning around Division 296.

30 June 2026 is when the new rules take effect. It’s also the date by which the analysis supporting the CGT cost base reset election must be completed, and the deadline to sell any assets you don’t want caught by the election. The election itself is lodged later, but the decision has to be locked in by this date. More on that below.

30 June 2027 is when the first assessment happens. Your Total Super Balance on this single date decides whether you fall into the Division 296 regime for the 2027 year. Worth noting: there’s a transition rule that measures TSB only on 30 June 2027 for that first year. So if you need to adjust, you still have a window.

The CGT cost base reset

This is the part most people haven’t heard about yet. A one-off election is available to anyone in super to reset the capital gains tax cost base of their fund’s assets to market value at 30 June 2026. The trustee has to make the decision and lodge a formal election. It doesn’t happen automatically.

If your fund holds assets with unrealised gains, resetting the cost base means those gains are excluded from the Division 296 earnings calculation going forward.

Here’s the trap. The election is all-in or all-out. You can’t cherry-pick the assets to apply it to. If you elect, every asset in the fund gets reset – including the ones sitting on unrealised losses, which would be wiped out by the reset.

That’s why the analysis has to happen before 30 June 2026. You need to look at the unrealised gain or loss position of each asset and decide:

– Assets with unrealised losses: consider selling them before 30 June 2026 so the loss is crystallised and not lost in the reset.

– Assets with unrealised gains: hold them and let the cost base reset apply once those are the only assets left.

The formal election can be lodged as late as the 2027 SMSF tax return due date (potentially May 2028), but the decision, and any pre-30 June disposals, have to be locked in by 30 June 2026. After that, the opportunity closes.

This election is available to everyone in super, not just those above $3 million. If your balance is $500,000 today but reaches $3 million down the track, running this analysis now could save you significantly.

What to do before 30 June 2026

Here’s a practical checklist for SMSF trustees:

Get accurate asset valuations. Every fund asset must be valued as of 30 June 2026. That valuation becomes the baseline for the cost base reset.

Decide on the CGT uplift. Some assets you may want to sell before 30 June 2026. Others, you’ll hold and use the cost base reset instead. The decision depends on the size of unrealised gains or losses sitting in each asset.

Know where your balance sits. Check your current Total Super Balance. If you’re approaching $3 million or $10 million, that changes the planning.

Project forward to 30 June 2027. That’s the first assessment date. If your balance is likely to cross a threshold by then, there’s still time to adjust.

What to do before 30 June 2027

Review your 30 June 2027 position. Because of the transition rule, your TSB on this single date determines your Division 296 exposure for the first year. If you’re close to a threshold, there may be opportunities to restructure before that date.

Lodge the CGT cost base reset election. The decision should have been locked in by 30 June 2026, but the formal election itself is lodged with the 2027 SMSF tax return. Make sure it’s prepared and filed correctly.

Review asset strategy. Only realised gains count from 1 July 2026 onwards. Your investment and disposal strategy needs to factor in how Division 296 interacts with the timing of asset sales.

Get reporting sorted early. Your fund may need actuarial certificates to split earnings between the pre- and post-commencement periods. Your advisor can get this underway now rather than scrambling later.

Don’t wait until June

The law doesn’t kick in until 1 July 2026, but the planning needs to happen well before that. The CGT cost base reset alone could save you a substantial amount of tax over the life of your fund. And if you’re near a threshold, what you do between now and 30 June 2027 determines how much of Division 296 actually bites.

We’ve put together a Division 296 planning service specifically for this. We review your position, run the numbers across different scenarios, and give you a clear set of actions. If your balance is above $3 million or tracking that way, talk to us now rather than later.

Already a PrimeAdvisory client?

Your advisor will be in touch to discuss how Division 296 affects your specific situation. If we haven’t been in touch yet, give your advisor a call. We want to make sure every client has a plan in place well before 30 June.

Not yet a client? We’d welcome the conversation. Drop us a line or book a strategy session. We’ll walk you through your position, identify the opportunities, and build a plan tailored to you.