Treasurer Jim Chalmers has announced significant changes to the controversial ‘Division 296’ superannuation tax.

Importantly, the government has conceded on two key aspects which were the subject of criticism in the initial bill:

• Unrealised gains of a superannuation fund will no longer be taxed, and
• The threshold at which the higher tax rates will commence will now be indexed to inflation.

Whilst we await the draft Bill for further details, in summary:

• Member balances of between $3,000,000 and $10,000,000, the earnings will be taxed an extra 15% (30% in total)
• Member balances greater than $10,000,000 will have their earnings taxed an extra 25% (40% in total)
• Both thresholds are to be indexed for inflation
• Div 296 will no longer apply to unrealised gains (noting there is not a lot of detail as to how ‘earnings’ will be calculated)
• The start date is now proposed to be 1 July 2026 (as opposed to 1 July 2025)

We will advise of any further details/consultation.