What is the Division 296 superannuation tax and who does it affect?

The Division 296 tax is a new Australian government measure targeting individuals with high superannuation balances. It applies an additional 15% tax on earnings for super balances exceeding $3 million, effectively doubling the concessional tax rate from 15% to 30% for these amounts.

How do the new tiered tax rates for high-balance superannuation work?

Under the revised policy, earnings on balances between $3 million and $10 million will be taxed at a total rate of 30%. A new indexed threshold has been introduced for balances exceeding $10 million, which will trigger a total earnings tax rate of 40%.

Why did the Australian Greens agree to pass the superannuation tax unamended?

The Greens agreed to support the Albanese government’s legislation to secure a "down payment" on broader progressive tax reforms. By waiving the bill through the Senate, the minor party is signaling its willingness to support further tax hikes in the upcoming May budget to address housing inequality.

What does the deal between Labor and the Greens mean for the May budget?

The agreement signals a "green light" for a high-taxing May budget focused on revenue raising and reform. With the Greens holding the balance of power in the Senate, their support for this bill suggests they may back further Labor proposals to increase taxes on wealthier Australians and investors.

What are the main risks for retail investors regarding capital gains tax (CGT) and negative gearing?

Following this deal, the Greens are urging the government to reduce the 50% capital gains tax discount and reform negative gearing. While not yet confirmed, these changes are being modeled by Treasury and could significantly impact the after-tax returns and strategy for property and equity investors.

Why is the SMSF Association calling Division 296 an "ugly tax"?

The Self-Managed Superannuation Fund (SMSF) Association is concerned about technical flaws in how tax liabilities are calculated. Specifically, they warn of "unintended consequences" where investors might be taxed on paper gains that haven't been realised or on balances that have decreased due to market losses.

How will the $3 million and $10 million thresholds be managed over time?

The $10 million threshold is set to be indexed, meaning it will rise over time to account for inflation, whereas the initial $3 million threshold was a point of significant negotiation.

Is this superannuation tax increase a certainty for 2026?

Yes, the tax is expected to pass by the end of this week now that the Greens have pledged their support in the Senate. This concludes a three-year legislative deadlock, making the higher tax rates a functional reality for high-balance retirees and those planning for significant wealth accumulation within super.

Government

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Greens clear path for new super tax hike

Written by Liezl GambePublished Mar 10, 2026, 12:30 AM

The Albanese government has secured a vital legislative victory after the Australian Greens pledged to pass the controversial Division 296 superannuation tax unamended.

The deal, which targets balances exceeding $3 million, effectively signals a "green light" for a high-taxing May budget, with the minor party framing the move as a down payment on "ambitious" progressive reform.

Greens treasury spokesman Nick McKim confirmed that the party will waive the bill through the Senate by the week's end.

This ends a three-year deadlock over the measure, which applies an additional 15% tax on earnings for high-balance funds.

Under the revised policy, a total tax rate of up to 30% will apply to balances over $3 million, while a new $10 million indexed threshold will trigger a 40% rate.

Senator McKim urged Treasurer Jim Chalmers to utilise the Greens' balance of power to pursue further hikes, including paring back the 50% capital gains tax discount and reforming negative gearing.

"Labor is standing in front of an open goal," McKim stated, suggesting the budget is a "once-in-a-generation opportunity" to tackle housing inequality.

However, the Self-Managed Superannuation Fund Association has labelled the legislation an "ugly tax," warned of technical "unintended consequences" regarding how balances are calculated.