Australia’s superannuation system is set for significant reform.
On 11 February 2026, Treasurer Jim Chalmers introduced the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 into Parliament. The proposed legislation would:
- Increase tax on super balances above $3 million
- Strengthen support for low-income earners through a higher Low Income Superannuation Tax Offset (LISTO) payment
If passed, these superannuation changes could affect retirement strategies, tax planning, and employer obligations from 1 July 2026 onwards.
New Division 296 Tax on Large Super Balances (From 1 July 2026)
Under the proposed Division 296 framework, superannuation earnings above $3 million would face higher tax rates:
- Up to $3 million → remains taxed at 15%
- $3 million to $10 million → 30% effective tax rate
- Above $10 million → 40% effective tax rate
Key details
- Thresholds will be indexed to inflation
- The tax applies only to future realised earnings
- It does not apply to unrealised capital gains on unsold assets
- Estimated to affect fewer than 0.5% of members (around 80,000 Australians)
For most Australians, super tax arrangements remain unchanged.
What this means for high balance members
If you have (or are projected to have) a super balance exceeding $3 million, this reform could significantly alter:
- Contribution strategies
- Asset allocation decisions
- Pension phase planning
- Estate planning considerations
Early modelling and strategic review may help reduce long-term tax exposure.
Increased Support for Low-Income Earners (From 1 July 2027)
The proposed reforms also enhance the Low Income Superannuation Tax Offset (LISTO).
Proposed changes:
- Eligibility threshold increases from $37,000 to $45,000
- Maximum payment increases from $500 to $810
- Automatic indexation linked to tax thresholds and Superannuation Guarantee rates
Who benefits?
- Over 1.3 million Australians
- Approximately 60% women
- Treasury estimates an average retirement benefit boost of around $15,000
For low-income workers, this means improved after-tax outcomes on concessional super contributions and stronger long-term retirement savings.
Employer Implications
While the reforms primarily affect individuals, employers should note:
- Low-income employees may receive higher government offsets
- High-income employees with large balances may require strategic tax advice
- From 1 July 2026, “payday super” rules require super contributions to be paid at the same time as wages
This may require payroll system updates and compliance planning.
Important: These Changes Are Not Yet Law
The Bill must pass Parliament before becoming law. It may be amended during the legislative process, and implementation details are still being finalised.
Proposed start dates:
- Division 296 tax → 1 July 2026
- LISTO enhancements → 1 July 2027
This provides a valuable, but short window for proactive planning.
How These Changes Could Affect You
Depending on your circumstances:
- High-balance members may need to reassess tax efficiency and diversification strategies
- Low-income earners may benefit from increased offsets
- Employers may need to prepare for compliance and payroll adjustments
Strategic advice now could position you advantageously before the complex superannuation rules change.