For the first year of Australia's new tax on large super balances, one date carries particular significance: 30 June 2027.

Under the transitional rules for 2026–27, only a person's total super balance at the end of that financial year determines whether Division 296 applies. The balance on 1 July 2026, or at other points during the year, does not determine whether the relevant threshold is exceeded.

Market movements, pension payments, withdrawals, contributions and asset valuations can therefore all influence the figure that matters at the end of the financial year.

A One-Day Test for the First Year

Division 296 has applied since 1 July 2026. It imposes an additional 15% tax on the proportion of superannuation earnings attributable to the part of a total super balance above $3 million.

A further 10% applies to the proportion of earnings associated with balances above $10 million.

For 2026–27, the Large Super Balance Threshold is $3 million. Division 296 applies only where a person's total super balance at the end of the financial year exceeds the applicable threshold.

This makes the first year unusual because the test focuses on the closing balance.

From 2027–28 onwards, the test changes to consider the greater of a person's opening and closing total super balance for the year.

Why the Date Effectively Counts Twice

The change in the balance test gives 30 June 2027 additional importance.

A person's closing total super balance for 2026–27 also becomes their opening balance for 2027–28.

This means that finishing 30 June 2027 above $3 million can affect more than the first year of the tax.

For example, consider a member with a balance of $3.2 million on 30 June 2027 who later reduces that balance to $2.8 million by 30 June 2028.

Because the 2027–28 test considers the higher of the opening and closing balance, the $3.2 million opening figure may still bring that member within Division 296 for 2027–28.

From 2027–28, a person generally needs to remain below the relevant threshold at both the beginning and end of the year to avoid being brought within the balance test.

Two Hypothetical Members Either Side of the Line

Consider Anna, a hypothetical retiree with a total super balance of $3.3 million on 1 July 2026.

Investment movements and regular pension payments reduce her balance to $2.95 million by 30 June 2027.

Because only the closing balance determines whether the threshold is exceeded for 2026–27, Anna would remain below the $3 million threshold for that year despite beginning the financial year above it.

Her closing balance of $2.95 million would then become her opening balance for 2027–28.

If investment returns subsequently lift her total super balance to $3.05 million by 30 June 2028, the greater-of test would bring her within Division 296 for 2027–28.

Now consider Ben, who starts 2026–27 with a balance of $2.9 million.

Investment gains lift his total super balance to $3.15 million on 30 June 2027, placing him above the threshold for the first year.

However, crossing the $3 million threshold does not mean the member's entire superannuation earnings become subject to Division 296.

If Ben's balance is $3.15 million, the amount above the threshold is $150,000. That represents around 4.8% of the total balance.

If $180,000 of earnings were attributed to him, approximately $8,570 would represent taxable super earnings under this simplified example, resulting in Division 296 tax of about $1,290.

The example shows that the system operates proportionately rather than creating an immediate tax charge on the entire balance once $3 million is exceeded.

These figures are illustrative only.

What Can Move a Balance Before the Test?

Several common events can change a person's total super balance before 30 June 2027.

Investment returns can increase or reduce the market value of assets held inside super.

For self-managed super funds, changes in the value of property, private investments and other unlisted assets can also affect the member's reported balance.

Pension payments and lump-sum withdrawals generally reduce the balance, while contributions increase it.

For 2026–27, the concessional contributions cap is $32,500 and the standard non-concessional contributions cap is $130,000, subject to eligibility and total super balance rules.

People with sufficiently high total super balances may have no available non-concessional contributions cap.

A person whose total super balance was $2.1 million or more at 30 June 2026 generally has a nil non-concessional contributions cap for 2026–27.

Downsizer contributions can also affect the final balance.

Eligible individuals can contribute up to $300,000 from the proceeds of selling an eligible home. These contributions operate separately from the standard contribution caps but still count towards the individual's total super balance.

As a result, a downsizer contribution could potentially move a member from below to above the $3 million threshold.

Each individual is tested separately, meaning spouses can have different Division 296 outcomes even where they manage their retirement savings together.

Division 296 Exemptions

Specific exemptions can apply under the Division 296 framework.

Under transitional arrangements, individuals who die during 2026–27 are exempt from Division 296 for that financial year.

Certain child recipients of superannuation income streams and recipients of qualifying structured settlements may also receive exempt treatment.

The availability of an exemption depends on the circumstances of the individual and the relevant superannuation interest.

What SMSF Trustees Need Around the Same Date

For self-managed super funds, 30 June 2027 is also important because accurate year-end asset values feed directly into the calculation of members' total super balances.

This is particularly relevant for funds with members whose balances are close to the $3 million threshold.

Property, private investments and other unlisted assets may require detailed valuation evidence to support their reported market values.

A relatively small valuation movement could determine whether a member finishes the financial year above or below the relevant threshold.

The 2026–27 annual reporting cycle will also require affected funds to deal with member-level earnings information associated with the Division 296 regime.

Accurate records and valuations will therefore be important for both balance testing and subsequent calculations.

The Separate Cost-Base Reset Date

A different transitional measure uses 30 June 2026 rather than 30 June 2027.

Eligible funds can make a one-off election concerning asset cost bases for Division 296 purposes using relevant market values associated with 30 June 2026.

Although the valuation date is different, the election is tied to the 2026–27 annual return process.

This means SMSF trustees may be dealing with two separate Division 296 timelines at around the same time: the 30 June 2027 balance test and the transitional cost-base rules linked to 30 June 2026 values.

Keeping those dates separate is important because they serve different purposes under the regime.

Key Dates to Watch

The first Division 296 balance test falls on 30 June 2027.

The applicable thresholds are subject to indexation. The $3 million threshold is indexed in $150,000 increments, while the $10 million threshold is indexed in $500,000 increments.

This means taxpayers should check the applicable threshold for each financial year rather than assume the original amounts will remain unchanged permanently.

SMSFs will also need to complete their 2026–27 annual reporting obligations, including relevant member information and any eligible transitional elections.

Division 296 assessments for the 2026–27 year are expected to follow after the relevant superannuation reporting has been processed.

Once an assessment is issued, the tax is generally payable within the period specified on the notice.

Why 30 June 2027 Matters

The significance of 30 June 2027 goes beyond being another financial year-end.

For 2026–27, it determines whether a member's total super balance exceeds the first Division 296 threshold.

At the same time, that closing balance becomes the opening balance used for the following year's greater-of test.

For people near $3 million, investment movements, withdrawals, contributions and valuations during 2026–27 could therefore influence Division 296 exposure across more than one financial year.

The rules remain proportionate, meaning exceeding the threshold does not automatically expose the member's entire super balance to additional tax.