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Division 296 Changes – What Treasurer Chalmers’ New Plan Means for You

October 21, 2025

Australia’s Treasurer Jim Chalmers has unveiled a revised version of the government’s previously proposed Division 296, aiming to strike a better balance between fairness and fiscal responsibility. The original proposal faced backlash for its complexity and unfairness in taxing unrealised gains. Chalmers is pushing for the revised changes to be in effect from 1 July 2026.

Here’s what’s changing and what it means for Australians with super balances over $3 million.

Key Changes to the Super Tax Proposal

  • No tax on unrealised gains
  • Change to the concessional super tax rate to earnings on balances above $3 million, and balances above $10 million
  • Indexation of the concessional super tax rate thresholds

 

Unrealised Gains

The original proposal included taxing unrealised gains—such as increases in property value—even if the asset hadn’t been sold. This was especially problematic for self-managed super funds that would not hold significant liquid assets to meet the increased tax obligations. The revised version removes the tax on unrealised gains, meaning only profits from sold assets will be taxed.

Super Tax Rates

The current concessional super tax rate is 15% of earnings irrespective of the member’s super balance. The proposed changes will apply a 30% tax rate on earnings on balances between $3 million and $10 million, and on balances above $10 million a tax rate of 40% will be applied.

Indexation of the Thresholds

The current proposal is that the $3 million and $10 million super balance thresholds will be indexed with inflation to maintain relativity with the Transfer Balance Cap provisions.

The rework is a significant step in making superannuation tax reform more palatable and practical; however, it is important to keep in mind that this is not yet legislation. Once again, we strongly recommend waiting for the final legislation before making any major changes to your superannuation strategy.

We are closely monitoring the ongoing progress of Division 296 and will provide updates as soon as the final legislation is passed. When the rules are clear, we will work with you to assess any potential impact and help you plan accordingly—well before the first taxing date of 30 June 2026.

If you would like to discuss these proposed changes, please contact our office on 07 3217 2477.