Yesterday the Div296 legislation, which is an additional tax on the earnings of those with higher super balances, passed the Senate.

The new tax will apply from 1 July 2026 ie the 2026/7 year. It will tax a proportion of earnings where an individual’s super balance is more than $3m at an additional 15%. For those with a balance of more than a $10m an additional 10% tax will apply. The tax will be charged to the individual who can then choose whether to pay the tax from private funds or from their super. The first assessments are expected to fall due in May 2028. The tax applies to all superfund accounts including industry, retail and SMSFs.

The relevant balance is measured as the higher balance at both the start and the end of the tax year. It combines all super accounts the individual may hold.

The earnings taxed will not include unrealised gains, but will be calculated in the normal manner with a few adjustments. There is an option to lock in market values at 30 June 2026, effectively resetting the cost base and reducing future taxable gains. This election is a one off and will be part of the 2027 SMSF tax return. It may also be advantageous for those that don’t yet have $3m in super but expect to do so.

Electing to reset the cost base will result in the need to maintain two sets of cost base histories, one for the normal SMSF taxable income using actual costs bases and one for the Div296 calculations using June 2026 cost bases.

We will keep you updated as more details emerge.

Lindsay 0413 952180