Tax on super

If you’re a high-income earner, you may be liable for an additional tax on your superannuation contributions, known as Division 293 tax.

Division 293 tax is an additional 15% tax on certain contributions and is generally payable if your combined income and concessional contributions for Division 293 purposes is more than $250,000 in the financial year.

If you are liable for this extra tax, the Australian Taxation Office (ATO) will calculate the amount payable when you submit your annual tax return and advise you accordingly.

You can find out more about Division 293 tax, including examples, on the ATO website.

The general transfer balance cap is currently set at $2.1 million. This is the maximum amount that can be transferred from your super into a pension account, where the investment earnings are tax-free. The transfer balance cap applies to current retirees and anyone yet to enter the retirement phase.

The transfer balance cap is indexed in $100,000 increments annually and will grow in line with the Consumer Price Index. As a result, there is not a single cap that applies to all individuals and if you started your income stream in a previous financial year, a lower cap may apply.

Amounts above the cap are subject to a transfer balance tax based on notional earnings determined by a legislative formula. The tax is payable to the ATO for each day the amount remains in excess of the cap.

The cap does not include investment earnings in your income stream account. So, if your retirement income stream account balance grows over your personal cap amount, you don’t need to do anything. Additional income tax rules may apply to defined benefit income streams.

You can find out more about excess transfer balance tax, including examples, on the ATO website.

If your total super balance exceeds the large super balance threshold of $3 million (2026/27) you may be liable for an additional tax on investment earnings, known as Division 296 tax.

Division 296 tax is an additional 15% tax on investment earnings on the portion of your total super balance exceeding the large super balance threshold (LSBT) of $3m and a further additional 10% tax on the investment earnings on the portion of your total super balance exceeding the very large super balance threshold (VLSBT) of $10 million.

The thresholds for Division 296 tax will be indexed in increments annually and will grow in line with the Consumer Price Index.

• LSBT will be indexed in $150,000 increments.
• VLSBT will be indexed in $500,000 increments.
  
  

In the first year (2026/27) Division 296 tax will apply if your total super balance exceeds the thresholds at the end of the financial year (30 June 2027). For future years to determine if you have exceeded the thresholds and Division 296 tax will apply, your total super balance will be the greater of the previous financial year end or current financial year end.

If you are liable for this extra tax, the Australian Taxation Office (ATO) will calculate the amount payable when you submit your annual tax return and advise you accordingly. You can find out more about Division 296 tax, including examples, on the ATO website.

If your permanent incapacity claim is approved and you withdraw your benefit as a lump sum, rollover or start a pension and receive regular payments, concessional tax treatments may apply.

You can out find more information on tax treatments on the ATO website or seek financial advice.

Death benefits are tax-free if paid to a tax dependant.

If the benefit is paid to someone who is not considered a tax dependant, the taxable portion of the benefit is taxed at 17% (including Medicare levy) and the untaxed component is taxed at 32% (including Medicare levy).

Find out more on our Nominate a beneficiary page.