Government Announces Major Changes to Division 296 Superannuation Tax
Posted on October 13th, 2025 by James Watson
What’s changed
The Federal Government has announced a revised version of the proposed Division 296 superannuation tax. The amendments respond to widespread industry concerns about fairness, liquidity, and the inclusion of unrealised gains.
These changes are not yet law. Legislation will be introduced later in 2025 for parliamentary consideration.
Summary of key announcements
|
Measure |
Original Proposal |
Revised Position (13 Oct 2025) |
|
Tax rate |
Flat 15 % additional tax on earnings from super balances > $3 million |
Two-tier rates: 30 % on balances between $3 m – $10 m, and 40 % above $10 m |
|
Tax base |
Applied to all earnings, including unrealised (paper) gains |
Limited to realised gains only, no longer taxing unrealised increases |
|
Thresholds |
Fixed $3 million (no indexation) |
Thresholds indexed to inflation (CPI) |
|
Start date |
From 1 July 2025 |
Deferred to 1 July 2026 |
|
Low-Income Super Offset (LISTO) |
Cap $500, income limit $37 000 |
Cap lifted to $810, income threshold to $45 000 (from 1 July 2027) |
What this means
- No immediate action required, final details await parliamentary passage.
- The revised structure narrows the impact to higher balance members.
- Indexation and delayed start provide extra time for planning and liquidity management.
Next Steps
- Review your superannuation balance projections and consider how these thresholds may affect you over time.
- Speak with your adviser about long-term super and investment strategy adjustments once the final law is confirmed.
Written By James Watson – CA SMSF Specialist
Disclaimer
This information does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to these factors before acting on it. This information may contain material provided by third parties derived from sources believed to be accurate at its issue date. While such material is published with necessary permission, WLF Accounting & Advisory and its related entities, does not accept any responsibility for the accuracy or completeness of, or endorses any such material. Except where contrary to law, we intend by this notice to exclude liability for this material. Any tax considerations outlined in this publication are general statements, based on an interpretation of the current tax law, and do not constitute tax advice. The tax implications of super investments can impact individual situations differently and you should seek specific tax advice from us as your registered tax agent or registered tax (financial) adviser.
