As debate resumes post-election, Australia’s proposed Division 296 measure, which introduces an additional 15 per cent tax on superannuation earnings for total balances exceeding $3 million, remains in limbo.

With the anticipated introduction of the proposed Div 296 tax, SMSF trustees and their advisers face significant new considerations for the 2025–26 income year and beyond. The Div 296 tax is set to impose an additional 15 per cent tax on individuals whose total superannuation balance exceeds $3 million, based on the movement in that balance between 30 June 2025 and subsequent 30 June dates. This measure squarely puts the spotlight on how SMSF member balances are determined and reported, and the timing of any transition to tax effect accounting becomes critical.

The updated safe harbour interest rates for Limited Recourse Borrowing Arrangements (LRBAs) for the 2025–26 income year have been published by the Reserve Bank of Australia (RBA) and we expect the ATO’s website will soon be updated to include the new rates.

Much of the debate surrounding the proposed Division 296 tax has focused on the headline threshold: individuals with more than $3 million in their Total Superannuation Balance (TSB) will face an additional 15% tax on part of their superannuation earnings.

The proposed Division 296 tax regime has sparked significant discussion, and a fair amount of confusion - around its impact on high-balance superannuation members. One persistent myth is that individuals with more than $3 million in their Total Superannuation Balance (TSB) will simply pay ‘30% tax’ on their super earnings.