Division 296 – Super balances over $3 million will see tax rate double to 30% by 2025

Have you heard about the superannuation tax Division 296? We explain it for you below and outline when it happens and how it could possibly affect you.

Division 296 is a proposed tax measure that would impact individuals with a Total Superannuation Balance (TSB) over $3 million at the end of a financial year.

Following the recent federal election, it’s expected that legislation to implement Division 296 will be reintroduced. It will likely be passed when Parliament resumes next.

When Will The Division 296 Super Tax Commence?

If enacted, Division 296 is proposed to take effect from 1 July 2025. The first assessment under the proposed rules would apply to individuals with a TSB (total superannuation balance) exceeding $3 million as of 30 June 2026.

How Will The New Tax Work?

Under the current proposal: 

• A 15% additional tax will apply to the earnings attributed to the portion of an individual’s TSB exceeding $3 million.

• Earnings for Division 296 purposes will be calculated using a formula based on the movements in your TSB during the financial year. The figure will include both realised and unrealised gains. 

This means the additional tax may apply even if you haven’t sold assets or withdrawn funds from your superannuation account.

What Should You Be Doing Now, To Prepare For Division 296?

At this stage, we recommend a cautious and considered approach. No significant changes should be made to your superannuation strategy until the legislation has been finalised.

Premature action could have negative consequences. Potential examples could be:

• Withdrawals made before the law passes may not be re-contributed due to caps and eligibility limits

• The final version of the legislation may still change

Considerations Before Making Any Changes

It’s critical to undertake appropriate modelling and seek professional advice from a licensed Financial Advisor. Several factors that need to be considered include: 

• Tax implications outside superannuation 

• Capital Gains Tax (CGT) implications of any realised superannuation assets 

• Estate planning and death benefit tax considerations 

• Personal circumstances and objectives 

Despite the introduction of Division 296, superannuation may continue to be the most tax-effective structure for retirement savings. Without appropriate modelling and planning, you may not have the correct information to make the right decision for your personal circumstances. 

Watch Our Information Session

If you’re wondering how this affects you or what to do next, complete the contact form below to access a recording of our information session, where we walk you through Division 296. Our team discuss key considerations and guides planning with confidence.

During this session, we’ll cover:

• • • A practical breakdown of the proposed legislation
    • Tax, CGT and estate planning implications
    • Real scenarios and frequently asked questions

How Can We Help You? Register Your Interest

To learn more and watch the video, please complete the form below to let us know how we can help. If you need advice on Division 296 rules and how to best manage your superannuation, please contact us.