26/05/2025
🚨 Labor’s Proposed New Super Tax – What You Need to Know
Labor’s proposed Division 296 tax is being pitched as a “minor tweak” that will only affect the ultra-wealthy. But scratch the surface, and the long-term consequences are hard to ignore, especially for the next generation of Australians.
Here’s what you need to know:
💡 What Is It?
Starting 1 July 2025, if passed, the Division 296 tax will impose an additional 15% additional tax on 'earnings' for individuals with super balances above $3 million.
The most controversial part?
It includes unrealised capital gains, meaning you could be taxed on increases in asset value, even if you haven’t sold anything.
💡 Who’s Affected?
Right now? Roughly 80,000 people.
But that number is expected to grow significantly over time. Why?
The $3 million cap is not indexed.
Someone starting work today (such as my son) on an average wage with consistent contributions and moderate growth could hit that cap by their mid-60s, even without ever earning “wealthy” income.
And while this might not worry retirees today, the impact on younger Australians and future generations is what’s most concerning.
💡 Can You Manage Around It?
As proposed, it appears that if someone unwinds their super to below $3 million by 30 June 2026, they may avoid the tax. That could be a strategic window for those near the threshold, but it needs careful planning and general advice.
It’s also important to know:
The $3 million threshold applies per individual across all super accounts, not just SMSFs.
A four-member SMSF could hold up to $12 million (4 x $3M) before triggering the tax for any member.
If one person’s balance exceeds $3 million, only that member is affected. The rest of the fund is untouched.
💡Why SMSFs Still Make Sense
Even with the new tax, an SMSF remains one of the most effective ways to grow and manage your wealth
Investment flexibility
Strategic control
Powerful for couples (up to $6 million combined before the new tax applies)
For many Australians, the benefits still far outweigh the risks, even if your balance edges past $3 million.
⏱️ What’s Next?
With Parliament still to finalise the legislation, the 1 July 2025 start date looks ambitious. Advisers, systems, and the ATO all need to prepare, and time is ticking.
✅ Take Control
This is a critical moment to assess your superannuation strategy. Don’t wait until the rules change to find out you should have acted sooner.
👉 Call our office today to discuss how these proposed changes could impact SMSF strategies in general, and learn more about your options under the current rules.
🔍 Or take our FREE Super Health Check – it only takes 2 minutes and gives you a tailored action plan and a personalised report. Find out exactly where you stand and what to do next.
🖱️ Start your checkup here: smsffinancialsolutions.scoreapp.com
⚠️ This post is general advice only and doesn't consider your individual circumstances.
