Author: Jason Roccasalvo, Partner, TAG Financial Services
Division 296 tax is almost 12 months away and while it is still sitting with Parliament, we need to be preparing clients now.
To help paint a picture of how it will work, we’ll introduce you to “Jason” – a soon-to-be retiree, who at 66 years of age, wants to stay at the forefront of protecting his acquired wealth.
A quick snapshot of Jason’s super earnings suggests a Division 296 tax as follows:
- Jason’s super as at 30 June 2026 is $3,500,000, which increased from $3,000,000 on 30 June 2025.
- Div 296 liability:
$68,110 * 15% = $10,216.
Jason’s super earnings consist of the following:
- $135,000 “taxable income”.
- $341,625 unrealised gains.
We need to begin engaging with our clients proactively now, starting them to think about the alternative choices they have in the lead up to this tax.
Decisions will need to be made regarding:
- retaining wealth in super and considering the alternatives;
- the tax costs of implementing the alternatives now and in the future; and,
- weighing up clients’ wishes to enable an effective solution.
One thing is for certain though, there is no “one size fits all” solution. Less Div 296 tax will mean more personal tax. It will also impact strategies around pensions and clients’ estate wishes, and overall family group complexity.
If you haven’t done so already, now is a great time to start having some of these conversations with your clients; especially as the use of Trusts is also on the rise again and there’s increased “sensitivity” around choices in navigating death benefits tax.
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Disclaimer: The information contained is general in nature. Professional advice should be sought before acting on any aspect on this page. Financial planning services provided by TAG Financial Advisors Pty Ltd (ABN 77 154 205 017 AFSL 415632), a wholly owned subsidiary of TAG Financial Services Pty Ltd (ABN 67 075 374 686). Copyright 2024. Please do not reproduce without the expressed written consent of the author.