Key Takeaways

  • High-income earners pay Division 293 tax — an extra 15% on concessional contributions — for incomes above $250,000, meaning super is still tax-effective but not as dramatically so as for lower earners.
  • Division 296 tax, applying from 1 July 2026 to balances above $3 million, introduces a new planning consideration for those with very large super balances.
  • The carry-forward concessional rule, non-concessional bring-forward, and spousal contribution strategies remain powerful tools for accelerating retirement savings at higher income levels.
  • The window before 1 July 2026 is an important planning moment — particularly for the CGT cost base reset available to those with balances above $3 million.

Playing by Different Rules

For high earners — those on taxable incomes above $250,000 — the tax dynamics of super are more complex and the planning stakes higher. The introduction of Division 296 tax from 1 July 2026 adds further complexity for those whose balances have grown into the millions. Yet superannuation remains one of the most tax-effective long-term wealth vehicles available at any income level — the question is how to use it most intelligently within the constraints that apply.

Understanding Division 293 Tax

For anyone with combined income above $250,000 — taxable income, reportable fringe benefits, and total net investment losses — concessional contributions attract an additional 15% tax levy, bringing the effective rate from 15% to 30%. That still compares favourably to the 47% marginal rate above $190,000. Division 293 applies to the lesser of the taxable concessional contributions and the income above the $250,000 threshold, and can be paid directly or from the fund by election.

Salary Sacrifice Still Makes Sense

Even with Division 293, salary sacrifice remains widely used. The concessional contributions cap for 2025–26 is $30,000, rising to $32,500 from 1 July 2026. This includes employer SG contributions — so for someone receiving 12% SG on a $200,000 salary, $24,000 is already used, leaving just $6,000 of remaining cap. For higher earners, residual salary sacrifice space narrows further.

Maximising Non-Concessional Contributions

For high-income earners who have already maximised their concessional cap, non-concessional contributions move additional after-tax savings into super — where earnings are taxed at 15% rather than marginal rates. The non-concessional cap is $120,000 for 2025–26, rising to $130,000 from 1 July 2026, with the bring-forward rule allowing eligible individuals to contribute up to $390,000 in a single year. Eligibility depends on total super balance — those approaching or above $1.9 million face restrictions, and those above the general transfer balance cap are ineligible.

The Spousal Contribution Strategy

For households where one partner has a lower super balance, spousal contributions shift wealth into a lower-balance account — extending the couple's combined non-concessional eligibility and keeping more assets inside super. Equalising balances approaching retirement can also improve Age Pension outcomes, and a modest tax offset is available for contributions to a spouse earning below a certain threshold.

Carry-Forward Concessional Contributions

The carry-forward rule allows individuals with total super balances below $500,000 to use unused concessional cap space from up to five previous financial years — less often relevant for consistent high earners, but useful for those returning from a career break or with variable business income.

Division 296 and the Planning Window

From 1 July 2026, individuals with total super balances above $3 million face an additional 15% tax on realised earnings attributable to the portion above that threshold. For those above $10 million, an additional 25% applies to earnings above that level.

The CGT Reset

For those above $3 million, the CGT reset to market value as at 30 June 2026 is a critical opportunity — future Division 296 gains will only reflect appreciation after that date. For assets that have grown substantially inside super, this can significantly reduce future tax exposure. The window is time-limited; coordinating with a tax adviser or SMSF specialist before that date is essential.

Managing Above-$3 Million Balances

Planning considerations include which assets generate the highest realised earnings, whether restructuring allocation could reduce realised income, and whether keeping very large balances in super remains optimal — none of which should be decided without professional advice.

Transition-to-Retirement Strategies

High earners approaching 60 may access transition-to-retirement (TTR) strategies — drawing a limited income stream from super while still working. Earnings inside a TTR pension are taxed at 15% rather than 0%, but TTR can still be useful to fund additional salary sacrifice contributions.