The New Era of Division 296
SMSF National Conference 2026
Introduction of Division 296 legislation
Stop the press on 11 February 2026, the Div 296 was introduced into parliament, now renamed to be Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026. This paper was drafted before the introduction of the Bill to parliament. We have therefore modified the paper to take into account the relatively minor changes.
On 19 December 2025, the exposure draft of the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025 was released. The Bill inserts new Division 296 in the Income Tax Assessment Act 1997 (Cth) (ITAA). The start date of the measures has been deferred to 1 July 2026 (if legislated), with the first assessments calculated based on super balances and earnings for the year to 30 June 2027. The first time the TSB is measured for Division 296 tax will be 30 June 2027.
The Bill replaces the prior Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023. On 14 October 2025, a Fact Sheet providing more information on changes to the Bill was released by Treasury. Broadly, the main changes involve:
redefining what is to be included as “earnings”: a shift from taxing movements in member benefits (including unrealised gains) to a realised earnings approach that aligns with existing income tax concepts
in addition to the previously proposed 15% tax on earnings on account balances above $3 million, introducing an even higher Division 296 tax rate, an additional 10% on earnings, on account balances above $10 million
indexing the $3 million and $10 million thresholds in accordance with Consumer Price Index, increasing the relevant thresholds in $150,000 and $500,000 increments, respectively.
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