Latest Divi 296 Super Tax Update

R+M recently hosted a Division 296 Superannuation Tax Seminar in early October at the Glen Innes Town & Country Club. The session aimed to clarify some of the myths and complexities surrounding the proposed $3M super tax and provided valuable insights to help attendees plan ahead. The evening featured strong engagement and thoughtful questions from the community, making it a successful and informative event. Following on from the seminar a new update has recently been announced with the following key changes: On 13 October 2025 the Federal Treasurer Jim Chalmers announced significant changes to the proposed new $3 million superannuation (Div. 296) tax. The announcement included significant changes that will mean going back to the drawing board on how to implement the legislation.   The key changes announced include:

• There will now be two thresholds - $3 million and $10 million.
• There will be an extra tax of:
  • 15% on the "earnings" associated with the proportion of the member's total super balance that's over $3 million, plus
  • A further 10% (so bringing the total to an extra 25%) on the "earnings" associated with the proportion of the member's total super balance that's over $10 million. This second tier is an addition to the original proposed legislation.
• Both the $3 million and $10 million thresholds will be indexed to inflation - albeit not every year. Like a lot of other thresholds, they will go up in jumps (of $150,000 and $500,000, respectively).
• Earnings will be worked out by the super funds themselves (when the ATO identifies someone who is subject to the extra tax(es), it will contact the Fund and ask for more information).
• The earnings amount will be "based on its [the Fund's] taxable income" and calculations will be "closely aligned to existing tax concepts". It looks like there will be scope for Funds to come up with something that's "fair and reasonable", rather than having to report the exact amount for each member (the exact calculation is difficult for some large Funds). But most importantly, earnings for this purpose won't include unrealised capital gains.
• Delaying the start of the proposed tax one year to 1 July 2026, so now super balances will first be assessed as at 30 June 2027.

  So what does this mean? The measures to index the thresholds, to not proceed with taxing unrealised gains and to delay the implementation by 12 months are very welcomed. These would have resulted in a significantly broader application of the tax and a substantial negative impact on super funds holding direct property. It is important to note that the proposed changes still need to be negotiated through parliament, and we may see further changes before the legislation is passed into law. Forward planning to accommodate the proposed taxation changes will remain key, particularly concerning Fund cashflow and the management of illiquid assets such as direct property.