Highlights

• Division 296 has prompted wealthy Australians to review how superannuation fits within their broader long-term wealth and retirement planning framework.
• Potential planning discussions include contribution strategies, balance management, alternative investment structures, and estate planning considerations.
• The proposal remains subject to final legislation, making flexibility and preparedness more important than immediate action.
• Decisions made in response to Division 296 may involve trade-offs between tax outcomes, simplicity, liquidity, administration costs, and long-term wealth objectives.

When a new tax appears on the horizon, the natural instinct is to ask what can be done about it. For wealthy Australians watching the progress of Division 296, the proposed additional tax on large super balances, that question is now front of mind. This guide sets out the general planning options that advisers and commentators discuss, organised as a menu of areas to explore rather than a set of instructions. The distinction matters: there is no single right answer, every option carries trade-offs, and the appropriate course depends on personal circumstances and the final form of the law. Nothing here is a recommendation, and each idea should be tested with a licensed professional.

Quick summary

Division 296 proposes an extra 15 per cent tax on the share of earnings tied to an individual's total superannuation balance above $3 million, measured across all funds at year-end. Wealthy Australians have a range of general options to explore, including reviewing contributions, considering withdrawals and recontribution where eligible, and weighing alternative structures for surplus wealth. These are areas to discuss with a licensed adviser, not steps to take unprompted, and the final design of the measure is still subject to legislation.

Why this matters now

The proposal has been framed around a 1 July 2026 commencement, although the start date and several design features shifted during debate and remain subject to final legislation. That defined window is the reason planning conversations are happening now. Many of the options worth considering, such as adjusting contribution patterns or restructuring how wealth is held, take time to arrange and cannot be reversed quickly. Beginning the analysis early, while the rules settle, gives affected individuals room to act deliberately rather than under deadline pressure.

Equally important is the discipline of not acting too soon. Because key design elements are not final, some moves that look sensible today could prove unnecessary or counterproductive once the legislation is confirmed. The goal of early planning is readiness, not premature action.

Who may be affected

The measure applies to individuals whose combined superannuation across all funds exceeds $3 million at year-end. Initially that is a small group, around half a per cent of account holders, but because the original design did not index the threshold, the population captured could broaden over time as balances grow. High earners and younger accumulators who expect to cross the threshold in future have as much reason to understand the options as those already above it.

What investors should understand

Before weighing any strategy, three mechanics are worth holding in mind. First, the extra tax is proportional: only the share of earnings linked to the balance above $3 million is caught, calculated as the balance minus $3 million, divided by the balance. Second, the individual is liable and can generally elect to pay personally or from super, a choice that itself affects future balances. Third, the original proposal measured earnings via the year-on-year change in balance, which could capture unrealised gains, a debated feature that is not settled law. These mechanics frame why each option below might appeal to some people and not others.

Possible planning options

The options that follow are presented as general areas to explore with a licensed adviser. They are not advice, not recommendations, and not ranked in any order of merit.

Reviewing voluntary contributions

For someone already near or above $3 million, the case for making further voluntary or non-concessional contributions may look different once an additional tax layer is in view. Some individuals discuss pausing or reducing voluntary contributions, while still weighing the separate advantages that concessional contributions can offer on the way in. The right balance depends on the wider tax position and goals.

A practical part of this review is mapping out projected balances over the next several years. Because the threshold was not indexed in the original design, a balance that sits below $3 million today may cross it through ordinary growth, which changes the calculus on whether to keep adding to super or to direct surplus savings elsewhere. Modelling those projections with an adviser, rather than relying on a snapshot of today, gives the contribution decision a firmer footing.

Withdrawals and recontribution

Where a person is eligible, partial withdrawals and recontribution strategies are sometimes discussed as ways to manage how wealth is held within and around super, including across the balances of a couple. These strategies are governed by strict eligibility and contribution rules, and they carry their own consequences, so they are firmly a matter for professional advice.

Sequencing of drawdowns

For those in or approaching pension phase, the order and timing of drawing down assets is sometimes considered as a way to manage the year-end balance, always within the minimum drawdown rules that apply to pensions. Sequencing is a nuanced area where small differences in approach can matter.

Alternative structures for surplus wealth

For wealth a person does not wish to hold in super, commentators discuss alternatives such as family or discretionary trusts, which can offer flexibility in how income is distributed, and investment or insurance bonds, which are tax-paid vehicles sometimes used for longer-term savings. Each has its own tax treatment, costs and constraints, and none is universally suitable.

The appeal of these alternatives is not simply lower tax, since that is far from guaranteed, but flexibility and diversification of where wealth is held. A family trust, for example, may allow income to be distributed across beneficiaries, while an investment bond can suit a long holding period without annual distributions to the investor. The trade-off is added complexity, ongoing administration and costs, and the loss of some of the simplicity that super provides, which is why the comparison must be made on a person-by-person basis rather than as a general rule.

Philanthropic structures

Some individuals with significant wealth and charitable intent discuss philanthropic vehicles as part of their broader planning. These serve genuine giving objectives first and foremost, and any tax characteristics are secondary to the underlying purpose. They are complex and warrant specialist advice.

Structures such as private ancillary funds or named giving accounts allow a considered, multi-year approach to philanthropy, separating the decision to commit funds to charity from the decisions about which causes ultimately receive them. For families, they can also become a vehicle for shared values across generations. Because the rules governing them are detailed and the commitment is significant, they are best approached with both legal and financial guidance.

SMSF and managed super fund considerations

Because the measure operates at the individual level, the available options apply regardless of whether wealth sits in a self-managed or large pooled fund. The practical considerations differ, however. Self-managed fund members holding illiquid or concentrated assets need to think about liquidity, particularly if the final law retains a measure that can tax unrealised gains, since some strategies depend on the fund being able to free up cash. Members of large pooled funds usually enjoy ready liquidity and diversification, which makes funding any liability or adjusting holdings more straightforward, though they have less direct control over individual assets. Matching a strategy to the type of fund, and to the liquidity it offers, is an important part of the analysis.

Risks and uncertainties

Every option above carries risk, and the overarching one is that the rules are not final. The start date, the treatment of unrealised gains and the question of indexation all moved during debate, and acting on assumptions that later change could leave a person worse off. There is also the risk of overreaction: moving wealth out of a concessionally taxed environment to avoid a tax that applies only to a proportion of earnings above a high threshold can, for some, cost more than it saves. Costs, complexity and loss of flexibility are real considerations with trusts, bonds and other structures. And strategies that touch eligibility-bound mechanisms, such as recontribution, can go wrong if the rules are misapplied. These risks are precisely why each option belongs in a conversation with a licensed adviser.

What to watch before 1 July 2026

Key signposts include the confirmed commencement date, the final definition of earnings and whether unrealised gains remain in scope, any decision to index the $3 million threshold, and administrative guidance from the Australian Taxation Office on reporting and payment. Each of these can change which options make sense and how urgently, if at all, they should be pursued. Tracking them allows planning to remain responsive to the law as it is finalised.