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Division 296 tax and Sharesight

This content applies to Australian tax residency portfolios only. This is general information and not financial or tax advice — consult a qualified tax adviser or SMSF specialist before making decisions.

Division 296 is an additional tax on superannuation earnings for individuals whose total superannuation balance (TSB) exceeds $3 million. It sits on top of the existing 15% fund tax — it doesn't replace it. It applies from the 2025–26 financial year onwards.

The individual is personally liable for the tax — not the fund. You can pay it from your own money or elect to have it released from your super.

Division 296 applies to your superannuation fund's investments. If you track your SMSF holdings in Sharesight, several reports can help you plan and prepare. See Using Sharesight for your SMSF.

What changed from the original bill

The legislation was significantly amended before passing. Key changes:

Unrealised gains no longer taxed — you are only taxed on actual, realised earnings. This is a major change from the original proposal.
Two thresholds — 15% additional tax on earnings above $3M, plus a further 10% (total 25%) on earnings above $10M. The maximum combined rate on a portion of super earnings can reach 40% for very high balances.
Both thresholds are indexed to inflation, so they rise over time.
Balance used = the higher of start-of-year or end-of-year balance — this prevents avoiding the tax by withdrawing just before 30 June.

Who is affected?

Division 296 applies if your TSB (across all super funds) exceeds $3 million at 30 June. If your balance is below $3 million, it does not apply.

How Division 296 tax is calculated

The ATO calculates your liability based on your realised super earnings (not unrealised gains) for the year, and what proportion of your balance sits above the threshold.

The formula is broadly:

Earnings = realised capital gains (with discount), dividends, interest, rent, and franking credits — excluding contributions and exempt pension income (ECPI), though ECPI is added back in for Div 296 purposes.
Proportion = (TSB − $3M) ÷ TSB (the share of your balance above $3M)
Taxable earnings = Earnings × Proportion
Division 296 tax = Taxable earnings × 15% (plus an additional 10% on the portion above $10M, if applicable)

Balance timing: The TSB used is whichever is higher — your balance at the start or end of the financial year. This means withdrawing mid-year to drop below $3M won't avoid the tax if your opening balance was already above the threshold.

Exception for the first year (2026/27): Only the 30 June 2027 balance counts, not the start-of-year balance. This gives members a one-time window to reduce their balance before the "greater of" rule locks in from 2027/28 onwards.

The cost base opt-in election (SMSFs)

This is one of the most important planning decisions for SMSF members. SMSFs can elect to reset the cost base of all assets to market value as at 30 June 2026. This means Division 296 only applies to growth after that date — gains built up before 2026 are protected.

Key points:

The election is all-or-nothing — you cannot cherry-pick individual assets.
It does not affect your fund's normal CGT position — only the Div 296 calculation.
The opt-in deadline is tied to lodging the 2026 tax return — don't lodge late.
Valuations for opt-in purposes are taken from the 2026 accounts (not 2027), so accurate valuations now matter.
Assets held through trust structures are excluded — the adjustment only applies to the fund's direct holdings.

For non-SMSF funds (industry and retail): a phased relief applies, reducing the proportion of capital gains that count from 80% in 2026/27 down to 0% by 2030. After 1 July 2030, non-SMSFs receive no relief, while SMSFs can opt in indefinitely.

Tip: Even SMSFs where all members are currently under $3M may benefit from opting in, as it locks in a fresh cost base if balances grow above the threshold in future.

Using Sharesight to plan for Division 296

If you track your SMSF in Sharesight, these reports are most relevant:

Report	How it helps
Unrealised CGT Report	See unrealised gains across all holdings — useful for deciding whether to realise gains or losses before year-end or before the opt-in date
CGT Report	Review realised gains for the year — these feed directly into the Div 296 earnings calculation
Taxable Income Report	See dividends, interest, and franking credits — all included in Div 296 earnings
Valuation Report	Get the market value of all holdings at a specific date — needed for the opt-in cost base reset
Historical Cost Report	Compare cost base vs market value — useful for identifying which assets have the largest embedded gains

The Unrealised CGT Report shows your portfolio's unrealised position — it does not calculate Division 296 tax directly. Division 296 is calculated by the ATO. Always consult your accountant for an accurate liability estimate.

Should members withdraw from super?

This depends on the balance:

Under $3M — super remains as tax-effective as before. Generally no action needed.
$3M–$10M — the additional 15% tax on that slice brings the effective rate to 30%, which may still be comparable to or better than holding assets outside super. Withdrawing has its own costs — take advice before acting.
Above $10M — the rate on the top slice reaches 40% (25% Div 296 + 15% fund tax). At this level, some clients may achieve a better after-tax outcome by restructuring assets into a company or other structure.

Note on death: When a member dies, super assets may be forced to be sold (triggering CGT in the fund), death taxes can apply at 15% for certain beneficiaries, and Division 296 adds a further layer on realised gains. High-balance members should consider the long-term structure of their wealth with an adviser.

Paying Division 296 tax

The ATO issues a Division 296 assessment after the end of the financial year. You then choose to:

Pay personally from outside super, or
Have the liability released from your superannuation account

The ATO provides a 60-day window to make this election after receiving your assessment.

Disclaimer

This page provides general information about Division 296 only and is not financial or tax advice. Division 296 calculations are performed by the ATO. Sharesight does not calculate Division 296 tax. Consult a qualified tax adviser or SMSF specialist before making any decisions.

Last updated 14th May 2026

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