Division 296: 30% Tax on Super? Should You Worry? (Probably Not)

You might’ve seen the headlines: “New tax on super!” Sounds scary, right?

But let’s take a breath. At Nestwell SMSF, we believe in facts over fear. So here’s what you really need to know about the proposed Division 296 tax.

What Is Division 296?

It’s a proposed law that would add 15% extra tax on earnings linked to super balances over $3 million.If passed, it’s due to start from 1 July 2025.

Under $3 million? You’re not affected. Not even a little.That’s it. You can stop reading now, unless you’re curious or close to the threshold.

Who Will It Impact?

Only about 80,000 Australians, or 0.5% of all super members.

So 99.5%? Totally unaffected.

The headlines make it sound bigger than it is.

What If You’re Over the $3M Mark?

Then yes, earnings on the portion above $3 million could be taxed at 30%, instead of 15%.

But here’s the kicker:

• Personal income tax? Up to 47%.

• Family trusts? Similar story.

• Even at 30%, super stays incredibly tax-effective.

A Few Things to Keep in Mind

1. Includes unrealised gains, even profits you haven’t sold yet

2. Cap isn’t indexed – over time, more people could be impacted

3. It’s personal, only individuals over the threshold are taxed, not the entire SMSF

So, Should You Do Anything?

• Under $3M? No action needed.

• Getting close? Chat with your adviser.

• Over the cap? It’s still a great structure.

Final Thoughts

Division 296 isn’t the end of the world, or your SMSF strategy.

At Nestwell, we help you cut through the complexity, stay compliant, and grow your super with confidence. Whether you’re starting out or managing a multimillion-dollar fund, we’re by your side.

Got questions? Let’s talk.