Div 296 Tax Implementation Pause Welcomed

The recent report in the Australian Financial Review (Friday 5 September) that the government has paused its plans to introduce the $3 million super tax in its current form is welcome. 

According to the report, while no decisions have been made, internal discussions have been held in recent weeks as the Prime Minister’s office takes an increased interest in the policy. 

As with all policies, politics is not far from the decision-making process.  Under the current timeline, the first round of determinations for the new tax would be issued in 2027, which is likely to be in the lead-up to the next federal election.  This could be creating pause for thought in government circles. 

As we have previously outlined, the key concerns with the policy to date have centered around three main points:

•  The new tax applies to unrealized gains
•  The $3m cap is not indexed to inflation
•  The start date is 1 July 2025

There are a multitude of options the government could consider limiting the concessions available to very large superannuation balances, without the clumsiness of the current Div 296 legislation.  It is important that any future policy in this area should not impact Self-Managed Super Fund members more than those in other funds. 

We call on the government to scrap this inefficient and counterproductive tax.  We encourage the government engage with purpose to Australia’s superannuation experts to ensure that any replacement policy is effective, targeted, and does not adversely impact Australia’s productivity.