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In this edition of It depends, partners Scott Hay-Bartlem and Clinton Jackson bring the latest updates on the government's proposed tax on large super balances, including the introduction of indexation.
Video Transcript
Welcome to this It depends, where we discuss what's happening with Division 296 tax – the tax on large superannuation balances.
What happened to Division 296?
The legislation to implement Div 296 was not passed before the last election, and therefore it lapsed when the election was called. Since the election, the treasurer has recommitted to, I guess, reintroducing Div 296, but we have been waiting to see what happens. Then on the 13th of October 2025, a big announcement came out where the treasurer effectively revamped the proposed Div 296 and we have a whole new proposal to work through.
What is the new start date?
So, the new proposed start date for the new and improved Division 296 is 1 July 2026, which is a year later than what was originally suggested.
Will the new tax apply to me?
Well, this is the It depends. The new version of Div 296 tax will no longer tax unrealised gains. We are waiting to see what the definition of realised gains will be, to see how the tax will actually apply. So, we need to wait for legislation on this issue. However, the new tax introduces two new thresholds. A 30% tax will apply on balances from $3 million to $10 million, and a new tax at 40% will apply to balances over $10 million.
So, there are two new thresholds?
So, with the new and improved Division 296, we have two new thresholds, 3 million and 10 million, with different tax rates on the part of your balance over those thresholds. One of the really good pieces of news with this new proposed Division 296, is that those thresholds are going to be indexed. So, that means they'll get larger over time. That is all we know for now about the proposed new Div 296 tax. As we get more details, we'll update you further on how this tax will affect you. If you'd like more detail on what we know to date, please tune in to our podcasts, SMSFs with CGW.
Thanks for watching this episode of It depends.
Cooper Grace Ward is a leading Australian law firm based in Brisbane.
This publication is for information only and is not legal advice. You should obtain advice that is specific to your circumstances and not rely on this publication as legal advice. If there are any issues you would like us to advise you on arising from this publication, please contact Cooper Grace Ward Lawyers.
