In October, the Federal Government announced several important updates to the proposed Division 296 superannuation tax, which are designed to make the policy fairer and easier to administer.
These changes are not yet law, but they give a clearer picture of what may be introduced.
What’s changed
- Only realised earnings will be taxed. The tax will now apply to income such as interest, dividends, rent and realised capital gains – not to unrealised gains.
- Two thresholds will apply:
- Balances above $3 million will attract an additional 15% tax on the portion of earnings relating to the balance over $3 million.
- Balances above $10 million will face an additional 25% tax.
- Thresholds will be indexed each year to inflation (CPI), reducing the risk of more people being drawn into the tax over time.
- The start date has been deferred to 1 July 2026, meaning the first potential assessment will be for the 2027-28 financial year (based on balances as at 30 June 2027).
Who will be affected
These changes will only impact individuals with total super balances above $3 million across all their funds (including both accumulation and pension balances).
What this means for you
While this version of the proposal is more practical than the original (which included taxing unrealised gains), it still represents a significant shift for high-balance members.
We’ll continue to monitor legislative developments and keep you informed as details are confirmed.
If you have questions about what this means for you, please contact us or your financial adviser.
This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs. For further information on anything that has been discussed in this article, please consider seeking qualified and professional advice.
The Wealth Mentoring Group 