What we know

The Government has changed its plan for Division 296.

Two big fixes are in place: Unrealised gains will not be taxed and the limits will rise over time.

If the law passes, the rules start on 1 July 2026. The first check date is 30 June 2027.
Draft law should land after Christmas. Input from industry should follow soon.

Key Points

• Two balance limits: $3 million and $10 million.
• Extra tax on earnings: 15% on the part between $3m and $10m. 25% on the part above $10m.
• Indexation: the $3m limit rises in $150,000 steps. The $10m limit rises in $500,000 steps.
• Earnings base: taxable income. Unrealised gains are out.
• How you pay: it seems like a personal tax. You may be able to draw from super to pay. This is not yet locked in.

Case Study

Assume earnings are 4% of the total balance.
A table can show the tax in two cases: accumulation and pension.

Important Note

A higher tax does not mean super is a bad home for wealth. People have different needs.
Think about your mix of assets, your need for cash, your estate plan, and your goals for retirement.
Do not rush to change your fund or take money out, especially if it holds property or private equity.
These are hard to sell. Costs can be high. The gain may be small.
Get advice. Run models before you act.

What We Don't Know

Some points are still open. Wait for the law before you make big moves.

Earnings

Guides say earnings will follow tax rules and use taxable income. We still do not know:

• Will capital gains get a discount, as in many super funds?
• Will exempt pension income be left out?
• How will earnings be set for defined benefit interests or complex funds?

Timing

Will the tax hit only gains built after 1 July 2026? Or all gains that are sold after that date?
This matters if you have large gains on paper now.
Say a fund sells an asset in 2026/27 that it bought years ago. Will tax cover only the gain since 1 July 2026, or the full gain?
The Treasurer hints at the first case. We need proof.
This may shape plans to sell before the rules start.

Defined Benefit

The first draft changed how total super balance was set for defined benefit pensions and for limited recourse loans.
We do not know if this will return. It could help fairness.
If left out, some members may sit above the limits due to values that do not match real life.

Payment

The tax will likely be paid by the person. A release from super may be allowed to fund the bill.
The method is not set.
This affects cash plans, especially if you hold little money outside super.

Why it matters

Be careful until the law is out. If your balance is near or above the limits:

• Do not restructure early.
• Watch for updates.
• Run models, but wait before you act.

We will share updates when more detail arrives.
For help with Division 296, contact your Boyce Advisor.