Division 296 Super Tax Calculator

The Division 296 Super Tax Calculator models the proposed Australian tax on earnings for very large superannuation balances. Enter your total super balance (TSB) at the start and end of the year, plus contributions and withdrawals, and the tool estimates your Division 296 earnings, the proportions of your balance above the AUD 3 million and AUD 10 million thresholds, and the two-tier tax that follows.

How It Works

1. Choose the relevant balance. In a transitional year the tool uses your end-of-year TSB. In a standard year it uses the higher of your start and end balances, so a balance that was large for most of the year is not escaped by a late withdrawal.
2. Calculate earnings the Division 296 way. Earnings are the movement in your balance after removing money you put in and adding back money you took out: end balance minus start balance, minus contributions, plus withdrawals.
3. Offset carried-forward losses. If earnings are negative, the loss is added to your carried-forward losses. If earnings are positive but smaller than earlier losses, the losses absorb them and no tax applies this year.
4. Apply the two tiers. The share of your balance above AUD 3 million is taxed at 15 percent of earnings, and the share above AUD 10 million attracts a further 10 percent, for a top combined rate of 25 percent on that top slice.

Formula

$\text{Earnings}=\text{TSB at year end}-\text{TSB at year start}-\text{Contributions}+\text{Withdrawals}$

$\text{Proportion above 3M}=\frac{\max(0,\ \text{Relevant TSB}-3{,}000{,}000)}{\text{Relevant TSB}}$

$\text{Proportion above 10M}=\frac{\max(0,\ \text{Relevant TSB}-10{,}000{,}000)}{\text{Relevant TSB}}$

$\text{Tax}=(15\%\times\text{Proportion above 3M}\times\text{Net earnings})+(10\%\times\text{Proportion above 10M}\times\text{Net earnings})$

Net earnings are earnings after offsetting any carried-forward losses. If the relevant TSB is at or below AUD 3 million, the tool reports the below-threshold status and no tax is payable.

Input Parameters

| Parameter | Unit | Typical range | What it means | | --- | --- | --- | --- | | TSB at start of year | AUD | 0 and up | Your total super balance at 30 June of the previous year, across all funds | | TSB at end of year | AUD | 0 and up | Your total super balance at 30 June of this year | | Contributions (optional) | AUD per year | 0 and up | All contributions made during the year, which are removed from earnings | | Withdrawals (optional) | AUD per year | 0 and up | All amounts withdrawn during the year, which are added back to earnings | | Previous losses (optional) | AUD | 0 and up | Division 296 losses carried forward from earlier years | | Transitional year (optional) | Yes or no | Default yes | Whether the transitional relevant-balance rule applies for the year modelled |

Total super balance means the combined balance of every super account you hold, including defined benefit interests at their calculated value, not just your largest fund.

Worked Example

A member starts the year with a TSB of AUD 3,500,000 and ends with AUD 4,000,000, after AUD 100,000 of contributions and AUD 50,000 of withdrawals. There are no previous losses, and the year is modelled as transitional.

1. Relevant TSB: the end balance, AUD 4,000,000.
2. Earnings: AUD 4,000,000 minus AUD 3,500,000 minus AUD 100,000 plus AUD 50,000 = AUD 450,000.
3. Proportion above AUD 3 million: (AUD 4,000,000 minus AUD 3,000,000) divided by AUD 4,000,000 = 0.25, or 25 percent.
4. Taxable earnings: AUD 450,000 x 0.25 = AUD 112,500.
5. Tier 1 tax: 15 percent of AUD 112,500 = AUD 16,875.
6. Tier 2: the balance is below AUD 10 million, so the second proportion is zero and tier 2 tax is AUD 0.
7. Total Division 296 tax: AUD 16,875.

At much larger balances the second tier bites. A balance growing from AUD 11,000,000 to AUD 12,000,000 with no contributions or withdrawals has earnings of AUD 1,000,000, a 75 percent proportion above AUD 3 million and a 16.67 percent proportion above AUD 10 million, producing tier 1 tax of AUD 112,500 plus tier 2 tax of about AUD 16,667, for a total near AUD 129,167.

Interpreting the Results

The status line tells you which situation you are in. Below threshold means no Division 296 liability regardless of earnings. Negative earnings means the balance movement was a loss after adjustments; the loss is not refunded, it is carried forward to reduce future taxable earnings. Tax payable means the estimate in the tax field is your modelled liability for the year.

Because the tax is proportional, only part of your earnings is ever taxed, even at a AUD 4 million balance only a quarter of earnings falls in scope in the example above. The effective rate on total earnings is therefore much lower than the headline 15 or 25 percent: AUD 16,875 on AUD 450,000 of earnings is an effective rate of 3.75 percent. Watch the carried-forward losses figure if you model several years in a row, because it directly reduces the next positive year.

Choosing the Right Tool

• Use the Division 293 Tax Calculator when your concern is high income plus concessional contributions crossing AUD 250,000. Division 293 taxes contributions; Division 296 taxes earnings on large balances. Different triggers, different bills.
• Use the Superannuation Calculator to project your balance forward year by year, so you can see when it may cross AUD 3 million in the first place.
• Use the First Home Super Saver Calculator if you are instead saving a first-home deposit inside super, which is a separate scheme for much smaller balances.

Limitations

Division 296 has been the subject of changing proposals, and rates, thresholds, start dates, and the transitional rules may differ in the law as finally enacted and administered. This tool models the two-tier design described in its calculation engine, including the unindexed AUD 3 million and AUD 10 million thresholds and the proportional method. It does not handle defined benefit valuations, fund-level tax offsets, or the interaction with Division 293 in the same year. Balances are total super balances as defined by the ATO, which can include amounts you might not expect. Confirm the current law and your TSB with the ATO and your fund before making decisions.

Questions

Is Division 296 tax charged on my whole earnings?

No. It is charged only on the proportion of earnings that corresponds to the part of your balance above AUD 3 million, plus a further slice on the part above AUD 10 million. The larger the balance, the larger the proportion in scope.

What happens in a year when my balance falls?

Negative adjusted earnings produce no tax and become a carried-forward loss. That loss then offsets earnings in later years before any Division 296 tax is calculated, which is why the tool asks for previous losses.

Does withdrawing money before 30 June avoid the tax?

In a standard year the relevant balance is the higher of your start and end TSB, which limits the benefit of a late withdrawal. Earnings also add withdrawals back, so taking money out does not reduce measured earnings. Timing strategies should be checked against the enacted rules with an adviser.

Sources and Methodology

The model follows the Division 296 design published in Australian Treasury consultation and exposure draft material for the better targeted superannuation concessions measure: a 15 percent tax on the proportion of earnings corresponding to balances above AUD 3 million, an additional 10 percent above AUD 10 million, the proportional earnings formula, and loss carry-forward. Total super balance concepts follow Australian Taxation Office (ATO) definitions. Because the measure has been revised over time, treat outputs as scenario estimates and verify against the law in force for the year you are modelling.