What is Division 296 and will it affect me?

Division 296 is a proposed superannuation tax introduced by the Labor Government.

Let’s just reiterate that the Division 296 tax is not yet law. It must be passed by both Houses of Parliament, with the start date of this tax yet to be confirmed.

The aim of the Division 296 tax is to reduce superannuation concessions for members whose total super balance (TSB) exceeds $3 million.  

Only a small portion of super fund members will be impacted by this proposed tax, however still, those with high balances the effect can be material. It is important to seek advice from your accountant or advisor for a tailored discussion.

What does this new Superannuation Tax mean?

If your TSB does exceed $3 million at 30 June, then this proposed super tax would mean an additional 15% tax on a portion of annual superannuation earnings (not just income but asset growth) above the $3 million threshold.

What should I do now?

• Review your current and projected Super Balances to see if you could be affected in the future.
• Seek professional advice before making any withdrawals or significant changes.
• Ensure your funds records and asset valuations are up to date and well documented.
• Start the conversation early with your advisor – don’t rush to withdraw super solely due to media headlines.
• Just remember that super remains a highly tax effective retirement vehicle, even with these changes, which are only proposed at this stage.