Super Alert: Div 296 tax to take effect from 1 July 2025

On Friday, 10 May 2024, the Senate Economics Legislation Committee recommended the Bill containing the measure to impose an additional tax on balances above $3 million (Div 296 tax, proposed new s 296‑35(1)(a) of the Income Tax Assessment Act 1997 (Cth) (ITAA)) proceed with no changes.

The key features of the Div 296 tax

  • The tax will be levied at a rate of 15 per cent on a proportion of an individual's “superannuation earnings” (including unrealised capital gains)
  • The proportion is determined as that part of their total superannuation balance above $3 million (at the end of each financial year)
  • The tax will be levied directly on individuals and imposed separately to personal income tax and superannuation fund tax (similar to the current Division 293 contribution tax, the individual may elect to pay this tax personally, or elect to pay the tax from their superannuation account balances)
  • The $3 million cap will not be indexed
  • The tax will first apply for the 2025/26 financial year (subject to the Bill making its passage through both houses before 30 June 2024).

BDO’s approach

Our superannuation advisers can assist clients to conduct detailed financial modelling to determine the potential impact of this new tax based on their unique circumstances and provide decision-making support.

Our strong recommendation is that clients should not act hastily. Rather, they should take the time to ensure they are in a position to make an informed decision closer to the first half of the 2025 calendar year.


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