Division 296 Tax: What high net worth Australians need to know about the proposed $3m Superannuation changes

Australians with high Superannuation balances may soon face major changes to how their retirement savings are taxed. The Labor Government has proposed a new law called the Division 296, and while it is yet to be legislated, it is set to come into effect on 1 July 2025, introducing an additional 15% tax on Super balances exceeding $3 million.

If you are a high net worth individual with a large Superannuation balance, it’s critical to understand how the Division 296 tax on Superannuation may impact your long-term retirement planning. It is important to note, the tax will apply to unrealised gains, meaning tax could be charged on the increased value of your super investments, even if you haven’t sold them or received any actual income.
‍

What is the $3m Superannuation Division 296 tax and who will it affect?
‍

The proposed Superannuation tax changes in Australia will apply to individuals with a Total Super Balance (TSB) over $3 million. Under current rules, Super earnings are taxed at a concessional 15%. However, Division 296 will introduce an extra 15% on the portion of earnings attributed to the excess above the $3 million cap.

This additional Super tax has sparked wide spread debate, particularly around the inclusion of unrealised capital gains. Investors who hold assets like property, shares, or private equity within their Super may face a tax bill based on paper gains, regardless of whether they’ve actually crystalised the profit.

Do you want to find out how much tax you could be set to pay? Use the Ord Minnett Division 296 tax calculator to see how it will impact your Superannuation.
‍

Why it matters for retirement planning in Australia
‍

For high net worth individuals, this policy could reshape retirement strategies, estate planning, and how Super assets are managed over the long term. Those with self-managed Super funds (SMSFs) and less liquid investments could be particularly affected, as they may be forced to fund a tax on unrealised growth without immediate access to those funds.

If you fall within this category, making knee-jerk changes, like withdrawing Super early or overhauling your investment strategy, could have unintended tax consequences and impact your financial security in retirement.
‍

Seek financial advice before making any changes to your Super
‍

The best course of action? Speak with a financial adviser who specialises in Superannuation and high net worth wealth planning. An experienced professional can help you:

• Assess whether you are likely to be affected by Division 296
• Understand how unrealised gains in your Super may be calculated
• Explore alternative tax-effective strategies outside of Super
• Rebalance your portfolio to suit the evolving regulatory environment
• Prepare a long-term retirement plan that adapts to the new tax rules

Receiving Superannuation advice tailored to your personal situation is key to protecting and growing your wealth and making informed decisions. The Division 296 Super tax has not yet passed Parliament in its final form, but early preparation can help reduce surprises down the track.
‍

Start a conversation
‍

The Division 296 Superannuation tax reform is one of the most significant changes to affect high net worth individuals in recent years.

To ensure you make the most tax-effective decision, you can take the proactive step of consulting a licensed financial adviser. With the right guidance, if required, you can adjust your strategy, safeguard your investments, and move forward with confidence.

If you would like to read our Frequently Asked Questions or download Ord Minnett’s Division 296 Quick Reference Guide, click here.

If you would like to start a conversation and consult wit one of our experienced private wealth advisers, click here.
‍

Important Information

‍

This webpage provides general information only and does not constitute financial, investment, or tax advice, and should not be relied on take make financial, investment or taxation decisions. The information is based on proposed legislation and current publicly available information as of May 2025, which may be subject to change. Individuals should seek professional advice tailored to their specific circumstances before making any decisions.

‍