How will $3m super tax work when my balance goes all over the place?

Q: Thank you for your recent column on the new Division 296 tax on super balances greater than $3 million that showed how much extra tax is likely where a balance has grown from $4 million to $4.1 million in the first year of the new 15 per cent tax. May I ask the following further questions? What if my super balance has declined at the end of year two from $4.1 million to $3.9 million? As I understand it, neither the fund nor I would receive a tax refund or credit because the unrealised “gain” has disappeared.

Assume further that at the end of year three, markets have recovered and the balance has risen from $3.9 million to $4.2 million, what tax is payable? Is it calculated using the base figure of $3.9 million (from the end of year two) or the highest prior balance against which tax has been assessed (year one at $4.1 million)? Andrew.