Division 296 Tax: How It Affects Sunshine Coast Couples

Why this matters for Coast couples

You’ve spent decades building your super. You did it so you could choose how you spend your days, whether that’s a morning swim at Kings Beach or more time with the grandkids.

If one of you has been the main earner, perhaps through a business or a long professional career, it’s common for most of the family’s super to sit in one name. Until now, that didn’t matter much for tax on earnings. From 1 July 2026, it can.

The useful question isn’t only “Can we move the money?” It’s “How do we arrange our super, over several years and within the rules, so it supports the retirement we want?”

How Division 296 works

Division 296 is an extra tax on the earnings of large super balances. According to the ATO:

• It applies from 1 July 2026, to individuals.
• For 2026–27, the large super balance threshold is $3 million, and the very large threshold is $10 million.
• You pay 15% on the share of your taxable super earnings that relates to the part of your total super balance above $3 million, plus a further 10% on the share relating to the part above $10 million.
• Both thresholds are indexed to inflation, in increments of $150,000 and $500,000.
• For 2026–27, it applies if your total super balance at the end of the year, 30 June 2027, is above $3 million. From 2027–28, it applies if your balance is above a threshold just before the start of the year or at the end of it.

The tax became law through the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026, which received assent on 13 March 2026. The ATO lists a few exceptions, such as for child recipients of a super income stream and people who’ve received a structured settlement contribution, so check the ATO page for the full list.

You can pay the tax yourself or elect to release the amount from your super. The ATO says assessments for 2026–27 will start in the later half of 2027–28, payment is due 84 days after the notice is issued, and you’ll have 60 days to elect to release the amount from super.

The two-bucket idea

The $3 million threshold applies to each person, so where your super sits matters.

Illustration only. Peter and Anne live in Caloundra. Peter has $3.5 million in super and Anne has $500,000, so together they have $4 million. Peter’s balance is above the $3 million threshold, and Anne’s is well below hers. If they could gradually move some of Peter’s super into Anne’s account, using the rules below, more of their combined super could sit below each person’s threshold. The contribution caps limit how quickly that can happen, and their ages, work status and other assets all affect what’s possible. This isn’t a recommendation, and the figures aren’t a tax calculation.

There are two main ways couples move super between them. Both have rules and limits, so it’s worth working through them with a licensed adviser, alongside your broader retirement tax strategy.

1. Contribution splitting

This is generally relevant to couples where at least one person is still working or still making concessional contributions.

• You can generally split up to 85% of your taxed concessional contributions to your spouse’s super, up to the concessional cap. For 2026–27, that cap is $32,500.
• Your spouse must be under their preservation age, or between preservation age and 65 and not retired.
• You usually apply after the end of the financial year in which the contributions were made, and funds don’t have to offer splitting.
• The split amount still counts towards your own concessional cap.

Splitting slows the growth of the larger balance and builds up the smaller one, one year at a time.

2. Withdrawing and re-contributing

For people who’ve met a condition of release, a withdrawal and re-contribution strategy can move larger amounts.

• Once you meet a condition of release (such as retiring after your preservation age, which is 60 for anyone born from 1 July 1964, or turning 65), you may be able to take a lump sum from your super (generally tax-free if over 60).
• That money can then be contributed to your spouse’s super. It counts as your spouse’s non-concessional contribution.
• The non-concessional cap is $130,000 a year. If your spouse is under 75 and their total super balance on 30 June 2026 was under $1.84 million, they may be able to bring forward up to $390,000. If their balance was $1.84 million to under $1.97 million, they may be able to bring forward up to $260,000 over two years. From $1.97 million to under $2.1 million, only the $130,000 annual cap applies, and at $2.1 million or more their non-concessional cap is nil.

Because re-contributed amounts are non-concessional, they generally form part of the tax-free component of your spouse’s super. That can matter for estate planning, and it’s worth reading about the super death tax as well.

Because of the caps, splitting and re-contributing work gradually, over several years.

More than tax

Equalising super isn’t only about tax. When most of the family’s super sits in one name, it’s worth both partners understanding how it works and what happens if one of you is no longer here. Having super in both names can make that conversation easier.

In our Path to Prosperity approach, we look at your super, your investments and your plans for your time together, not just the tax.

Limits to keep in mind

Moving super between partners isn’t right for everyone. Contribution caps limit how much can move each year, and splitting depends on your spouse’s age and work status and on whether your fund offers it. Withdrawals need a condition of release, and amounts moved to your spouse belong to them. There can be costs, such as fund fees or the cost of selling investments, and the move can affect Age Pension, estate planning and the transfer balance cap. Whether any of this suits you depends on your circumstances, so get personal advice first.

The bottom line

Can couples move super between them? Sometimes, within the contribution caps and the conditions of release. The rules regarding the general transfer balance cap ($2.1 million for 2026–27; personal caps can be lower) and the new Division 296 tax interact, so it’s worth getting personal advice before you move money.

Division 296 is a big change, but with time and a plan, couples can respond to it calmly. Whether you’re still working or already retired, it’s worth understanding the rules before you move money. If you’re a few years out, our guide to pre-retirement planning is a good next read, and our super and pension advice page explains how we help.