As many may have heard or read, Division 296, the Australian Government’s new superannuation tax, was confirmed by Treasurer Jim Chalmers in his October 2025 announcement. The commencement date is set for 1 July 2026, with key revisions to the original proposal that make it more targeted, manageable and acceptable to the broader tax community.
From that date, individuals with high-balance superannuation accounts will face a new layer of taxation, reshaping how wealth is managed in retirement. For mining and resources professionals, many of whom have built substantial super balances through high earnings, employee share schemes, and strategic investments, this marks a pivotal moment.
What Is Division 296?
Division 296 introduces an additional tax on superannuation earnings for individuals whose Total Superannuation Balance (TSB) exceeds $3 million. Importantly, the tax applies only to realised earnings, income and capital gains that have been crystallised, not unrealised gains, which were controversially included in the earlier proposal.
The structure is tiered:
- $3m–$10m: Additional 15% tax on earnings attributable to this portion.
- Above $10m: Additional 25% tax (15% + 10%) on earnings attributable to this portion.
Both thresholds will be indexed over time, helping to mitigate the impact of inflation over time.
| TSB Tier | Standard Tax on Fund Earnings (inside super) | Division 296 Additional Tax (on earnings portion) | Maximum Effective Tax Rate on Earnings |
|---|---|---|---|
| Less than $3 million | Maximum of 15% (standard concessional rate)* | Nil (Div 296 does not apply) | 15% (no change) |
| $3 million – $10 million | Maximum of 15% on all earnings* | +15% on portion of earnings attributable to balance over $3m | ≈30% on earnings for the portion > $3m (plus 15% for the first $3m portion) |
| Above $10 million | Maximum of 15% on all earnings* | +15% on earnings portion for $3m–$10m slice +25% on earnings portion for balance over $10m | ≈30% on $3m–$10m portion ≈40% on portion above $10m |
*Note: For individuals in Retirement Phase (also known as pension phase), the standard concessional tax rate on superannuation earnings may be nil for earnings relating to assets supporting their pension. As a result, the effective standard tax rate on fund earnings is likely to range between nil and 15%, rather than being a flat 15%, depending on individual circumstances. For examples – please see Treasury Better Targeted Superannuation Concessions.
Despite the maximum combined tax rates outlined above, in reality, the effective combined tax rate is likely to be significantly below the maximum rate(s) due to the tax to pension balances and the proposed tiered system.
This tax will be assessed annually, starting with balances as at 30 June 2027.
Why Mining & Resources Professionals Must Pay Attention
Mining and resources professionals are uniquely positioned to be impacted:
- High Earnings & Contributions: Generous salaries, bonuses, and employer contributions mean many in this sector reach the $3m threshold earlier than most.
- Self-Managed Super Funds (SMSFs): Common in the industry, SMSFs often hold capital growth assets like property or mining shares. While unrealised gains are no longer taxed, large one-off sales could trigger significant Division 296 liabilities.
- Employee Share Schemes (ESS): Equity-based remuneration can dramatically increase wealth. Decisions about whether to contribute proceeds to super must now factor in Division 296 implications.
- Retirement & Succession Planning: Many professionals aim for early retirement or structured succession. Division 296 introduces new complexity that must be navigated with foresight.
This tax isn’t just a policy change – it’s a strategic inflection point. The mining and resources community must now rethink how wealth is structured, preserved, and passed on.
Strategic Planning Starts Now
With limited detail currently available from the Treasurer and Treasury, it’s wise to wait for the final legislation before making firm decisions. However, now is the time to assess whether Division 296 may affect you, and to what extent.
If you’re likely to be impacted, it’s important to start reviewing your superannuation and retirement strategy considering your personal circumstances, investment outlook, and broader financial goals. Here’s how:
- Leverage the Timing
- Consider Realising Gains Before 1 July 2026: Selling assets with large unrealised gains before the tax kicks in could avoid the additional 15% or 25% tax. But timing must align with market conditions and personal goals. There are also tax avoidance rules that may apply where assets are sold and are then effectively repurchased shortly after. It is important to work with your tax and financial advisors if you are considering this strategy.
- Review Contributions & Withdrawals: Avoid pushing your balance to $3m early by not making large contributions right before the tax starts. If already retired and above the threshold, consider drawing down to reduce exposure.
- Model Your Future Balance
- Forecast Your TSB: Work with an adviser to project your balance by June 2027. If you’re close to $3m, even modest growth could push you over the threshold.
- Scenario Planning: Model outcomes with and without asset sales, and with different investment structures. This helps determine whether to cap super contributions or redirect savings elsewhere.
- Legacy Super Products: Defined benefit pensions or legacy pension arrangements (such as market linked income streams or lifetime pensions) can inflate your TSB unexpectedly. Review and potentially restructure these to account based pensions to avoid unintended tax consequences. This is a complex issue and obtaining qualified advice from a superannuation specialist is recommended.
- Diversify Investment Structures
- Beyond Super: Consider family trusts or companies for new investments. These offer flexibility and may be more tax-efficient once your super exceeds $3m.
- Balance Is Key: Super still offers powerful benefits, especially in pension phase, but beyond a certain point, returns may diminish. A diversified approach can optimise tax outcomes and liquidity. Your personal and family circumstances will guide which options are best for you.
- Prepare Your SMSF
- Valuations Matter: Accurate asset valuations as at 30 June 2027 will determine your TSB. Ensure valuations comply with ATO guidelines and are based on objective, supportable data.
- Liquidity Planning: Ensure your SMSF can meet its tax liabilities. Holding some liquid assets or planning periodic sales may be necessary.
- Contribution Strategies: Don’t abandon super contributions. Use carry-forward strategies where appropriate. Division 296 is an overlay, not a reason to disengage from super.
- Stay Informed, Stay Ahead
- Legislation Is Evolving: Final laws will be introduced in 2026. Stay abreast of updates, transitional rules, and potential carve-outs.
- Don’t Delay: The tax has survived political cycles and is now locked in. Waiting until 2027 could leave you exposed with limited options.
Turn Change into Opportunity
Division 296 is more than a tax; it’s a catalyst for strategic financial review. For mining and resources professionals, it’s a chance to:
- Reassess wealth structures.
- Align retirement, succession, and intergenerational wealth transfer plans with new tax realities.
- Optimise the use of superannuation alongside other vehicles.
This is not a time for passive observation. It’s a time for proactive planning, informed decision-making, and strategic action.
At Resources Unearthed, we specialise in guiding mining and resources professionals through complex financial landscapes. With integrated expertise across tax, financial planning, and legal strategy, we’re here to help you navigate Division 296 with confidence.
Whether you’re just approaching the $3 million threshold or well beyond it, tailored advice is essential. Let’s turn this legislative shift into a well-managed opportunity for your financial future and for the generations to come.
For those seeking a more holistic approach to managing family wealth, succession, and legacy, explore our recent article here on Wealth with Purpose: Family Office Solutions.
For more information and arrange a 20-minute discussion with Craig Barry, please contact Resources Unearthed on +61 (0) 7 3007 2000 or email contact@resourcesunearthed.com.au.
Read more about Craig here
Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting and business advisory services for executives, professionals and business owners in the mining and resources sectors.
This is general advice only and does not take into account your objectives, financial situation or needs, so you should consider whether the advice is relevant to your personal circumstances.
