Division 296 Tax: Debate grows over proposed super tax on balances above $3m
The Division 296 tax, set for July 2025, targets super balances over $3 million with a 15% tax on unrealised gains. Industry groups and politicians are raising concerns.
Author: Shona Sherman | Executive Director | People & Operations | HFB
A proposed tax that has people talking is the Division 296 tax, which - if legislated in its current form - will see a rate of 15% tax imposed on a percentage of earnings equal to the percentage of superannuation balances that exceed $3m for an income year.
There has been much debate (and concern in the industry) about the potential effects of the Division 296 tax – particularly the tax on unrealised capital gains - and we’re no closer to knowing exactly what the legislation is going to look like when it takes effect from 1 July 2025.
With professional bodies, such as SMSF Association, advocating strongly against elements of the legislation, and members of the Senate becoming increasingly worried about the unintended repercussions of imposing taxes on unrealised capital gains, we may see some changes to the Bill in its current form – whether these changes are minor or significant remains to be seen.
Further, the Opposition have said that the legislation will be repealed if they win the next election – however it is important to note that they would need support in both upper and lower houses for it to be repealed.
For now it is a ‘watch this space’!