Superannuation and Division 296 Super Tax: What Do You Need to Know
Written and accurate as at: Oct 21, 2025 Current Stats & Facts
Superannuation and Division 296 Super Tax: What Do You Need to Know
Treasurer Jim Chalmers has announced major changes to the proposed Division 296 tax, which targets high-balance superannuation accounts.
What’s Changing?
| Feature | Original Proposal | Revised Proposal |
| Start Date | 1 July 2025 | 1 July 2026 |
| Tax Base | Included unrealised gains | Realised gains only |
| Thresholds | $3 million (non-indexed) |
$3 million (indexed) + new $10 million tier (indexed) |
| Tax Rates |
Flat 30% Additional 15% tax |
30% (>$3m-$10m), additional 15% tax 40% (>$10m) Additional 25% tax |
|
LISTO - Low Income Super Tax Offset |
$310 | Increased to $810 |
| Total Super Balance | Change to definition |
What the experts at LBW Business + Wealth Advisors are saying
At LBW Business + Wealth Advisors we are happy that the reworked Division 296 are a more balanced approach within our tax system. The 13 October 2025 announcement reflects industry feedback by removing the proposed tax on unrealised gains and introducing indexing for fairer tax for future generations.
While the revised framework still introduces an additional layer of complexity requiring further analysis, we wait for the legislation to be presented to be able to provide clarity and continue to guide our clients.
What It Means for You
- If your balance is under $3 million: You won’t be affected by Division 296, but the increased LISTO offset may benefit you if you’re a low-income earner.
- If your balance is over $3 million: You’ll pay additional tax on earnings above the threshold, but only on realised gains. The new tiered rates mean those with balances above $10 million will pay more.
- If you’re in an SMSF: The changes reduce the risk of being taxed on paper gains, which is especially important for members holding property or long-term assets.
- If you’re planning contributions: The definition of your total super balance may affect your ability to make non-concessional contributions, even if you’re under the $3 million threshold.
What Should You Do?
- Review your current super balance and projected earnings.
- Speak with your adviser about how the new rules may affect your retirement strategy.
- Don’t rush to restructure or withdraw — the legislation has not been drafted or passed yet.