Two Big Super Changes Are Coming

Just when you thought superannuation couldn’t get any more exciting, the Government has introduced two significant changes:

• Division 296 – a new tax on higher super balances

• Payday Super – changing when employers must pay super

Both are aimed at improving fairness and accountability, but they also mean a bit more thinking, planning, and in some cases, adjusting.

Let’s break it down.

Division 296 – The New “Super” Tax

Division 296 is a new personal tax that will apply from 1 July 2026.

According to the Government, it’s designed to make super “more equitable and sustainable.” In practical terms, it means higher balances will attract higher tax.

What’s changing?

From 1 July 2026:

• An additional 15% tax will apply to earnings on balances above $3 million

• This increases to 25% for balances above $10 million

Before anyone panics, this doesn’t apply to most people. But for those it does apply to, it’s worth understanding properly.

How it works (in plain English)

• This is a personal tax, not a tax on your super fund

• The ATO calculates your liability based on your Total Superannuation Balance (TSB) and earnings

• You then choose whether to:

• Pay it personally, or

• Have it paid from your super

Key things to know

• It only applies if your total super exceeds $3 million

• Your balance is measured across all funds, not just one

• For SMSFs:

• The rule applies per member, not per fund

• So a large fund doesn’t automatically mean a tax issue

• If your SMSF has borrowings:

• Your share of the loan is added back when calculating your balance

• Importantly (and after some well-earned criticism):
  The tax is based on realised earnings only, not paper gains

• The thresholds will be indexed annually, which helps prevent “bracket creep” over time

So… should you pull money out of super?

Short answer: probs not yet.

If you’ve met a condition of release (e.g. retired or over 65), withdrawing funds to reduce your balance might seem logical, but earnings outside super can be taxed at up to 47%, which could be worse than staying in the system.

As always, this is an area where good advice matters.

Payday Super – No More “We’ll Pay It at Quarter-End”

The second change is Payday Super, starting from 1 July 2026.

And yes, it does exactly what it sounds like.

What’s changing?

Instead of paying super quarterly, employers will need to:

Pay super at the same time as wages

So if you run weekly payroll, you’ll be paying super weekly too.

Why the change?

The Government is aiming to:

• Reduce unpaid super

• Improve employee outcomes

• Increase transparency

All reasonable goals, though it does mean some adjustments for business owners.

What this means for employers

This is less about tax, and more about systems and cash flow.

You’ll need to:

• Align super payments with each payroll run

• Ensure your systems can handle more frequent payments

• Keep a closer eye on cash flow timing

The days of holding onto super until the end of the quarter are numbered.

The practical reality

• More frequent processing (at least initially)

• Less flexibility on cash flow timing

• Greater ATO visibility of what’s being paid and when

The good news? With the right software and setup, much of this can be automated.

In summary…

These changes reflect a broader trend:

• Higher super balances = more tax scrutiny

• Employer obligations = more real-time reporting

For most people, Division 296 will be something to be aware of rather than worry about.

For employers, Payday Super will be the more immediate and practical change.

Either way, a bit of forward planning now will make life much easier later (and we’re always in favour of that).

If you’d like help reviewing your position or preparing your business for these changes, please get in touch with m+h Private today on +61 3036 7174. Early advice can prevent costly surprises.

 As always, the above is general in nature, please discuss with your trusted advisor.