Government revises proposed $3 million super tax (Division 296)
The Federal Government has announced today major adjustments to the proposed Division 296 tax on superannuation earnings above $3 million, following industry consultation.
Key changes include:
- Start date pushed back
The measure would now begin on 1 July 2026, based on Total Super Balances at 30 June 2027. - Progressive tax rates introduced
Instead of a flat rate, a tiered system will apply to earnings:
- Up to $3 million: 15%
- $3 million to $10 million: 30%
- Above $10 million: 40%
- Thresholds to be indexed
The $3 million and $10 million caps will be indexed over time to reflect inflation and align with the Transfer Balance Cap. - Only realised earnings taxed
The tax will apply to future realised gains, not unrealised gains—addressing liquidity concerns for SMSFs and funds holding illiquid assets. - Defined benefit parity
Defined benefit schemes will receive equivalent treatment, with Treasury to consult on calculation methods.
These revisions are seen as a substantial improvement on the original proposal and reflect strong advocacy from the industry and professional bodies.