Navigating the new Division 296 tax on super balances over $3M? Starting in July 2026, members face a 15% tax on earnings for balances exceeding $3M, plus an extra 10% for balances over $10M. Be sure to learn how the crucial CGT election impacts your SMSF. Discover what exact steps you must take to protect your hard-earned savings before the June 2026 deadline. Do not let these new laws catch you!
Read MoreThe proposal to include unrealised capital gains in calculating income subject to the additional 15% tax rate on super fund balances over $3 million should lead to an effective cap on balances of $3 million. (The additional personal tax involved is referred to in the draft legislation as Division 296 tax liability). If the administrative costs to individuals of complying with this change, and the cash flow problems of making such tax payments, are as large as critics have argued, no one will want to hold assets above $3 million in super.
In that case the deterrent effect of this change will mean that such taxation never needs to be applied. And the mark of a good deterrent is that it is so effective in affecting behaviour that it never needs to be applied. Individuals will transfer assets above $3 million out of super accounts into their personal account.
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