The latest updates on Division 296 tax on superannuation
By Andrew Dunbar | 24/10/2025
After months of consultation and public debate, the federal government has released major updates to the proposed Division 296 tax on superannuation. The changes aim to make the policy fairer and more practical for Australians with larger super balances.
While the legislation is still being finalised, the revised framework offers greater clarity and more time to plan ahead.
Key updates to the proposal
Several important changes have been made since the original draft:
Start date deferred
The introduction of the new rules has been pushed back by a year, now starting from 1 July 2026 instead of 1 July 2025.
No tax on unrealised gains
The previously proposed tax on ‘paper gains’, i.e. increases in asset values that haven’t been sold, has been scrapped. Division 296 tax will now only apply to realised gains.
Tiered tax rates introduced
A more progressive structure will apply, with different rates based on your super balance:
- 30% on earnings for balances between $3 million and $10 million
- 40% on earnings for balances above $10 million
This replaces the earlier flat additional 15% rate on earnings over $3 million.
Indexation of thresholds
Both the $3 million and $10 million thresholds will now be indexed to inflation, helping prevent bracket creep over time.
Low income super tax offset (LISTO) changes
From 1 July 2027, the LISTO cap will rise from $500 to $810 and the income threshold will increase from $37,000 to $45,000.
Original vs latest proposal
| Feature | Original proposal | Latest update (Oct 2025) |
|
Start date |
1 July 2025 | 1 July 2026 |
|
Tax on unrealised gains |
Yes |
Removed |
|
Tax rate |
Flat additional 15% above $3m |
30% ($3m–$10m), 40% (>$10m) |
| Threshold indexation | No |
Yes |
What this means for you
Overall, these updates significantly reduce the immediate impact of the proposed changes for high-balance super members. The delayed start date and removal of tax on unrealised gains make the rules easier to manage and less punitive.
That said, the legislation is not yet law. Draft legislation is expected in early 2026, so it’s important to stay informed but avoid taking premature action.
What you should do now
It’s understandable that you might be considering how these changes could affect your superannuation strategy but now is not the time to make major moves. The delayed start date gives more time for planning and strategy adjustments. Here are a few steps to take instead:
- Avoid withdrawing large sums from super until the legislation is finalised.
- Wait for the confirmed details before making irreversible decisions.
- Speak with your financial adviser about your broader wealth strategy, including:
- Diversifying investments outside super
- Reviewing your estate planning
- Exploring other tax-effective structures where appropriate
Seek advice
At Apt Wealth Partners, we’ll continue to closely monitor the Division 296 superannuation tax developments and prepare strategies to help clients adapt quickly and effectively. Our advisers specialise in navigating complex super and tax legislation so you can stay focused on your long-term financial goals.
If you’d like to ensure your strategy is ready for these changes, contact us by calling 1800 801 277 or emailing info@aptwealth.com.au
General Advice warning
The information provided in this blog does not constitute financial product advice. The information is of a general nature only and does not take into account your individual objectives, financial situation or needs. It should not be used, relied upon, or treated as a substitute for specific professional advice. Apt Wealth Partners (AFSL and ACL 436121 ABN 49 159 583 847) and Apt Wealth Home Loans (powered by Smartline ACL 385325) recommends that you obtain professional advice before making any decision in relation to your particular requirements or circumstances.
