Carey Group SMSF Newsletter

Proposed Division 296: New Super Tax on Balances Over $3 Million

A significant superannuation change is on the horizon. The proposed Division 296 tax introduces an additional 15% tax on earnings from super balances above $3 million, starting from the 2025–26 financial year.

If legislated, this measure would apply to both SMSFs and APRA-regulated funds, and could impact individuals with higher super balances by increasing the effective tax rate on their retirement savings.

What is Proposed Division 296?

Division 296 is a proposed tax that aims to make the superannuation system more sustainable by reducing tax concessions for those with very large balances. Under the current plan:

• Individuals with a total super balance over $3 million will be taxed an extra 15% on earnings attributed to the excess.

• This would effectively bring the total tax rate to 30% on earnings above the $3 million threshold.

Who Could Be Affected?

This proposed measure may affect:

• High-income earners with large existing super balances

• Business owners using SMSFs for property or investment strategies

• Individuals planning substantial contributions before retirement

• Estate planning strategies that rely on large super balances

Even if you’re not currently over the $3 million threshold, future growth of your super could bring you into scope — especially if your investments are compounding well over time.

What You Can Do Now

Although Division 296 is not yet law, it’s wise to:

• Review your long-term SMSF or super strategy

• Consider the implications for retirement income and estate planning

• Speak with your adviser to explore possible restructuring options

Staying informed and planning early is the best way to maintain flexibility and tax efficiency.