Author: Emma Partenza, Senior Manager – TAG Superannuation Advisory & Audit
The government has hit reset on one of its most talked-about super tax changes.
Today, Treasurer Jim Chalmers announced a reworked version of Division 296 – the proposed new tax on large superannuation balances.
The update addresses some of the biggest concerns raised since the measure was first announced in 2023. But while it’s fairer and more practical, it still signals a major shift in how high-balance super will be taxed from here on.
What’s changed – and what’s stayed the same
The reworked plan keeps the higher tax on large super balances, but makes three important changes from the original version:
| Feature | Original 2023–24 Proposal | New October 2025 Update |
| Tax base | Applied to total earnings, including unrealised (paper) gains | Applies only to realised gains (when assets are sold) |
| Threshold | Fixed at $3 million (not indexed) | Indexed to inflation ($3 million + $150k increments) |
| Additional tier | Single rate only – 30% on all earnings above $3 million | Two tiers: 30% between $3–10 million, 40% above $10 million |
| Start date | Planned for July 2025 | Delayed to 1 July 2026 |
These changes aim to make the system more balanced and sustainable limiting generous concessions for very high balances, while removing the unfairness and “bracket creep” risk of the old design.
Why it matters
Even if your balance isn’t above the new thresholds, this shift sets the tone for how future super rules could evolve.
Super remains tax-effective, but less “set-and-forget.” For those approaching or exceeding the new thresholds, it’s worth considering:
• Whether holding certain growth assets inside or outside super is still optimal;
• The liquidity of your fund – will you have cash available to pay future tax; and
• Whether your estate and legacy plans still make sense under these new rules.
The bottom line
The reworked Division 296 rules are a clear improvement on the original draft – more workable, more predictable, and less punitive. But they still introduce a new layer of complexity for high-balance investors.
TAG Financial will continue to monitor the legislation closely and provide practical guidance once final details are released.
If your super balance is around or above the $3 million mark, and you aren’t already speaking with us, now is the time to start the conversation.
Contact team@tagfinancial.com.au or call us on 03 9886 0800.
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 2025. Please do not reproduce without the expressed written consent of the author.