With the Labor Party securing a majority in the recent election, the proposed Division 296 tax—a new superannuation tax targeting large balances—is expected to pass through Parliament with ease. Although there are still some political negotiations ahead, it’s time for individuals with higher super balances to start preparing.
At Boa & Co. Chartered Accountants, we’re closely monitoring these developments so you don’t have to navigate this alone. Below, we explain the current proposal and what you should consider before 30 June 2026.
What Is Division 296 Tax?
Division 296 tax is a proposed 15% additional tax on the earnings related to superannuation balances over $3 million. This tax will be on top of the existing 15% tax that already applies to most super fund earnings.
Under the current draft legislation, this tax will apply from the 2025–2026 financial year, with the first testing date being 30 June 2026.
What does this mean for you?
If your total super balance (including SMSFs and retail/industry super) is above $3 million on 30 June 2026, you may be liable for the Division 296 tax—regardless of whether you’ve retired or not. However:
- If your balance is above $3 million on 1 July 2025 but falls below $3 million by 30 June 2026, you won’t be taxed under this rule.
- The new tax is calculated by the growth in your balance, not the actual income earned by your fund.
Keep in mind: The legislation is not yet final. The Greens, whose support is needed in the Senate, are pushing for a lower threshold of $2 million, which could broaden the impact significantly.
What Should You Do Now?
While the tax isn’t law yet, it is wise to begin early preparation—but avoid making rushed decisions.
Here’s how to get started:
- Review your total super balance across all funds (including retail and industry super, not just SMSFs).
- Update the valuations of all SMSF assets to ensure you have accurate records.
- Consider future contributions or withdrawals—do they align with your long-term retirement strategy, especially in light of the proposed tax?
- Start modelling your position under different balance scenarios (e.g., $2.5M, $3.2M, etc.) to understand your potential exposure.
Why Early Planning Matters
Although the rules aren’t locked in, being prepared gives you more control, especially if you’re approaching the $3 million threshold. For example, an up-to-date asset valuation could mean the difference between falling just under or just over the tax threshold on the testing date.
At Boa & Co., our team has already begun working with high-balance clients to model their tax exposure, adjust asset strategies, and prepare compliant valuations in case the tax becomes law.
Talk to Boa & Co. Today
Division 296 has not yet been passed into law, and the final version could look quite different from what has been proposed. But early awareness and tailored planning now can help you stay ahead and avoid reactive decisions later.
If you’d like to understand how this tax could impact your superannuation strategy — or if you’re unsure of your current super position — we’re here to help.
Call our team at 1300 952 286,
Email us at [email protected], or
Visit www.boanco.com.au
Let Boa & Co. Chartered Accountants be your trusted adviser in navigating this new chapter of superannuation reform — with expertise, clarity, and strategy tailored to your unique situation.