While the Nation was concerned with the War in the Middle East on 5 March, the Senate approved a new Superannuation Tax known as the Division 296 Tax. It takes effect from 1 July 2026.

This tax will impact high-balance superannuation accounts that exceed $ 3 million and $10 million in the first instance. However, in the longer term, it will capture whole generations of younger superannuants in their 20’s and 30’s.

Key aspects of the new tax:
It applies to individuals with a total superannuation balance (i.e., the sum of all their super accounts) exceeding $3 million. It applies an additional 15% tax, bringing the total to 30% on all earnings and realised capital gains.

The savings graces to the legislation were that the $3mil threshold would be indexed and that unrealised capital gains would not be taxed. These were the measures contained in the first draft and were strongly opposed by all sectors of the superannuation community.

For individuals with superannuation balances exceeding $10 million, an additional 25% tax applies to earnings and unrealised capital gains, bringing the total tax to 40%.

For people who find themselves in this situation where the tax will apply to them, there is a period between now and the end of this financial year during which mitigation measures can be implemented. Up-to-date valuations are essential to ensure the data is accurate while reviewing how balances are held between spouses. If you are considering selling assets, you will face capital gains tax issues. Remember, the Government is looking to reform capital gains tax (which is parliamentary-speak for an increase in the tax rate), and we expect those changes to come into effect on 12 May 2026 – Budget night. So, this leaves a smaller window of opportunity to make any changes.

These changes are significant, as will be the pending Capital gains tax changes, and for that reason, we recommend you seek specific tailored advice for your circumstances.

With expert guidance at every stage of life, we can help you navigate financial decisions with confidence – from building wealth and securing your future to planning succession and protecting your legacy.