Finally, reason and logic have won the day, with the Treasurer caving in to pressure over the $3 million super tax, now known as Division 296.

The $3 million tax was absurd in its intent and implementation, seeking to tax unrealised capital gains – a first in Australian and Western tax history – while refusing to index the thresholds, even though superannuation thresholds are regularly indexed. It was draconian and a ‘sleeper’ for younger Australians, and disruptive for rural superannuates who often hold intergenerational property and farming assets in their super funds.

The government will now introduce a separate $3 million superannuation tax threshold, proposing an additional 15% tax on balances greater than $3 million but less than $10 million. Above the $10 million superannuation threshold, balances are to be taxed with an additional 25% taking it to 40%.

For balances above $10 million, this should incentivise people to withdraw funds from super. We expect to see Investment bonds and Trusts to be the recipients.

Industry has now been given a further 12 months to prepare, with the revised version coming into effect from 1 July 2026.

We are entirely in agreement with this new proposal, given that superannuation aims to provide retirement funding rather than to transfer intergenerational wealth. We feel the thresholds are fair.

The effect of this change is expected to save the government circa $1.6 billion next year, assuming there are no further delays (a big ask)…

The process from here will involve drafting new legislation, followed by a consultative process. There are still many questions to be answered, including how “earnings” and capital gains discounts are defined. So, while we feel a 1 July 2026 start makes sense, it may still prove ambitious.

Australia has the second-largest superannuation and pension system in the world. As we have seen, it’s become one of our greatest export industries, making investments around the world. Superannuation tax breaks this Financial Year are estimated at $60 billion. All this has been achieved in 33 years.

Indeed, our system is something to be proud of, uniquely Australian and touching every Australian.

The superannuation landscape is evolving, and it’s only natural to have questions about what these changes mean for you. If you’d like to talk through how these updates might shape your retirement plans, we’re here to listen and provide guidance, helping you achieve lasting peace of mind through sound, tailored financial strategies.