Australia's self-managed super sector has never been bigger. Even as a new tax on very large Superannuation balances moves closer, the number of people choosing to run their own fund keeps climbing to fresh records. The apparent contradiction says a lot about who is joining the sector in 2026 and why the headline reforms have done little to slow the momentum.

A sector at record scale

The latest Australian Taxation Office data, for the year ended 30 June 2026, shows roughly 680,000 self-managed super funds holding more than $1.1 trillion in Assets on behalf of about 1.24 million members. The ATO's March 2026 Quarterly Report counted 672,805 funds and almost 1.24 million members, with total estimated assets of $1.06 trillion.

Growth has been brisk. The number of funds rose by about 47,000 over the year, and just over 12,000 new funds (12,264) were established in the June 2026 quarter alone. Data indicates flows into SMSFs so far this year are running 31% higher than in the 2025 financial year.

What Division 296 actually does

Much of the commentary preceding these figures focused on Division 296, the additional tax on Earnings from large super balances. The version now enacted differs markedly from the 2023 proposal that first drew attention.

Under the legislated model, the tax applies from the 2026–27 income year, commencing 1 July 2026, with the first assessment at 30 June 2027. It uses two thresholds, both indexed to inflation: earnings attributable to balances between $3 million and $10 million are effectively taxed at 30%, and earnings on balances above $10 million at 40%.

Critically, the revised law removed the taxation of unrealised capital gains that featured in the earlier proposal, so only realised earnings are captured. The tax is assessed to the individual rather than the fund, and individuals may elect to have the amount released from super to pay it.

Why the reform hasn't derailed growth

The design helps explain why establishments have held up. Because the thresholds start at $3 million and are indexed, the measure targets a comparatively small group with very large balances.

Most people setting up funds are nowhere near that territory. Recent research covering the six months to 31 December 2025 put the average age of a new Trustee at 47, and figures show those aged under 50 account for nearly 70% of new funds. Trustees at that stage of accumulation are typically building balances, not managing multi-million-dollar tax bands.

Indexation matters too. Because both thresholds rise with Inflation over time, fewer people are expected to be drawn in by rising balances alone than under a fixed cap.

What trustees may wish to consider

None of this makes an SMSF suitable for everyone. Running a fund involves time, cost, administration and legal responsibility, and whether it is appropriate depends on individual circumstances. Trustees are personally responsible for meeting the sole purpose test, preparing an Investment strategy, keeping records and arranging an annual independent audit.

For those with larger balances, the mechanics of Division 296, including the release election and how the higher of opening and closing balances is measured, could Warrant closer attention. Professional advice may be appropriate.

The bottom line

The sector's record size sits alongside a tax reform that, in its enacted form, reaches only the largest balances. With growth concentrated among younger accumulators well below the thresholds, the two trends are less contradictory than they first appear. How the sector evolves as the first assessment approaches in 2027 remains to be seen.