Got over $3 million in super? Extra tax has been on the cards and the ATO has revised the legislation that will impact you... but there’s now time to plan. The revised rules are fairer, but the impact could still be significant. Smart moves now can save you later. Read on, then reach out for a tailored strategy review.
Quick Snapshot
Division 296 introduces an additional tax on superannuation earnings for individuals with high super balances. Originally set to apply from July 2025, the government has revised both the timing and the structure of this tax following consultation with industry bodies and practitioners.
Division 296: What’s Different in the Updated Legislation
What This Means for You
The revised Division 296 rules bring more clarity and fairness to how high super balances are taxed. Here’s a quick summary of the key takeaways:
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No more tax on ‘paper profits’: The revised model ensures you’re only taxed on actual income received or capital gains realised, not on notional asset growth.
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Higher tax rate for ultra-high balances: If your super exceeds $10 million, earnings on the excess attract a higher rate (40%).
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Indexation helps avoid bracket creep: Both thresholds will now increase annually in line with inflation.
In short, these updates remove unnecessary complexity and provide a clearer framework for managing your super tax position going forward.
Trekk Advisory’s Insights
While no-one likes paying extra tax, these are welcome improvements. It removes a significant compliance burden and gives clarity for planning. For our clients, particularly those with SMSFs or business property in super, this simplifies strategy decisions and protects against tax surprises.
We’re using this lead time to get in front of this for our clients:
- Model your future exposure to Div 296
- Assess super strategies for you and your spouse
- Review asset mix and realised vs unrealised earnings
- Guide you on drawdowns, pensions, contributions, and SMSF planning
Next Steps
The revised Division 296 rules create new considerations for high-balance super members, especially those with SMSFs or business assets in super. A proactive review of your superannuation and tax planning strategy can help you manage realised earnings, reduce unnecessary tax, and optimise your retirement outcomes. Get in touch with Trekk Advisory for expert guidance on SMSF structuring and tax-smart super planning.
This briefing is for general information only and should not be relied on as legal or financial advice. Please consult with us directly for tailored advice based on your personal circumstances.
