How the $3m super tax works and when it may impact you (Division 296)
Written by Glen James
Host of the Retire Right & money money money (formerly my millennial money) podcasts & author of The Quick-Start Guide to Investing.
No doubt you’ve heard about the $3million super tax, let’s unpack it.
This super tax is labelled Division 296. It’s a new 15% super tax for balances over $3 million. It is estimated to initially affect around 80,000 individuals. This includes those with Total Super Balances over $3 million (not indexed), meaning more Australians will be caught over time due to inflation and growth.
My view on it
Before we talk through the essentials, let me share my personal view. I think it’s problematic that they’re taxing unrealised gains. I also think it’s problematic that it isn’t indexed (but I do believe this will be done later, time will tell). I completely understand that you may feel like you’ve been told to prepare for your retirement using super, but next minute they’re moving goal posts. I still believe in the power of superannuation—don’t give up on the super system. Legislative risk is something we all experience on our finance journeys, whether inside or outside super. Take this opportunity to make a plan, alter things as needed with the help of a professional and try not to freak out. Let me be clear, superannuation is still a very favourable system for retirement savings.
The basics, the tax:
applies from 1st July 2025 (not legislated, probably backdated to here)
is an extra 15% tax on growth (not just income)
includes unrealised gains
is assessed at personal member account level, not at fund level if you have a SMSF
only applies to individuals with super balances > $3 million
Now, please, before you panic: always consult a licensed financial adviser or tax professional before taking action. Planning now can help avoid unintended tax consequences later. The information I provide on Retire Right is always general in nature and does not equate to specific advice tailored to your situation, you must apply this within the context of your personal financial situation.
Martin and I sat down and ran through this tax in detail & how it's calculated, touching on case studies that might help you plan for your own situation. I’d highly recommend you watch the clip to see the visuals we presented:
📺 Watch the full conversation on YouTube
🎧 Listen to the episode now
Community question
Community member says: What happens if someone didn’t lodge a tax return last year? Can you lodge two at once?
Glen says: If you missed lodging last year’s tax return, you can lodge both, just not in the same return. Each financial year needs its own individual tax return, so you’ll need to lodge two separate ones.
Now, if you’re lodging late, just be aware the ATO might charge interest or penalties, especially if you owe tax. It’s not guaranteed, they sometimes let it slide, but it’s totally up to their discretion. On the flip side, if they owe you money, don’t expect them to pay interest on that late refund!
With how things are tracked nowadays—like employer payments, bank interest, dividends, even contractor income—the ATO already has a lot of that info. So it’s tricky to fudge it or roll multiple years into one. Even expenses need to be correctly matched to the year they were incurred.
Quick reminder: the financial year ends on 30th June, and if you don’t have a tax agent/accountant, the deadline to lodge is 31st October. Don’t rush in and lodge on 1st July though, give it a couple of months for all the data and reports to roll in.