On October 13, 2025, the Federal government announced sweeping changes to the proposed $3m Super tax (Division 296). These revisions follow concerns from taxpayers, and extensive industry feedback, particularly in regards to taxing unrealised gains.
What’s Changed?
1. No Tax on Unrealised Gains
The government has scrapped the plan to tax unrealised capital gains. The additional 15% tax will now apply only to realised earnings—such as dividends, interest, rent, and capital gains that have actually been received—on the portion of a member’s super balance above the relevant thresholds.
2. Tiered Tax Rates Introduced
- $3 million to $10 million: Realised earnings taxed at an effective rate of 30%
- Above $10 million: Realised earnings taxed at 40%
- Both thresholds will be indexed to inflation, helping prevent bracket creep over time.
3. Start Date Deferred
The commencement date has been pushed back to 1 July 2026, giving super funds, SMSF trustees, and advisers more time to prepare.
4. Boost for Low-Income Earners
The Low-Income Superannuation Tax Offset (LISTO) will be expanded:
- Maximum offset increased from $500 to $810
- Income threshold lifted from $37,000 to $45,000 This change is expected to benefit over 3 million Australians.
What This Means for You
- Balances under $3 million will remain unaffected.
- High-balance members should begin reviewing investment and drawdown strategies ahead of 2026.
- SMSF trustees should prepare for new reporting obligations once legislation is finalised.
- The deferred start date offers time to plan (e.g. rebalancing, crystallising gains, restructuring), but we recommend waiting for the final law before making any changes.
Our Perspective
Removing unrealised gains from the tax base and introducing indexed, tiered thresholds is a welcome shift. These changes address liquidity concerns and reduce compliance complexity, especially for SMSFs holding illiquid assets like property.
Next Steps
We’ll continue to monitor developments and provide updates as legislation progresses. If you’d like to discuss how these changes may affect your personal or SMSF situation, please reach out to our team.
