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Sladen Snippet - Treasurer announces major changes to Div 296 tax – including removal of tax on unrealised gains

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In a media release published on 13 October 2025, Federal Treasurer Jim Chalmers announced major changes to the proposed Division 296 tax.

As discussed here and here, draft legislation for ‘Div 296 Tax’ was initially introduced to Parliament in November 2023. The bill sought to impose a new Division 296 tax of up to an additional 15% on members with a $3 million or more total super balance.

The Div 296 bill was subject to criticism by industry, in particular due to:

  • the lack of indexation on the $3 million threshold;

  • the number of farming properties held in SMSFs that can’t be easily disposed of/partially disposed of to reduce a member’s total super balance; and

  • the taxation of unrealised capital gains.

After being held up in the Senate, the Div 296 bill effectively lapsed with the calling of the May 2025 Federal Election.

Up until recently, it seemed that with a Labour election victory and a friendlier Senate, the Div 296 bill would be enacted in its original form. That was until media reports suggested there was internal dissent within the Labour party over the design of the Div 296 tax.

By media release dated 13 October 2025 the Treasurer confirmed that the Div 296 bill will not be reintroduced in the same form as previously.

Instead, it will contain the following key changes:

  • instead of one unindexed threshold of super balances of $3 million, there will be two thresholds, both of which will be indexed:

    • $3 million (indexed)

    • $10 million (indexed)

  • For both thresholds, the Div 296 tax will apply to income and realised earnings, at a rate of up to 30% (earnings on balances between $3 million and $10 million) and up to 40% (earnings on balances over $10 million)

  • Start date pushed back to 1 July 2026 (from 1 July 2025)

Crucially, these changes mean that the earnings calculation for Div 296 purposes will only apply to future realised earnings, rather than applying to unrealised ‘paper gains’ as provided for under the original Div 296 bill.

The introduction of indexation of the $3 million and $10 million thresholds is also a welcome common sense measure and is consistent with other indexed thresholds in the super system (such as the transfer balance cap).

As for when we will see the amended Div 296 bill, the media release suggests it won’t be until early 2026.

Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801  
E pbroderick@sladen.com.au    

Philippa Briglia
Special Counsel
T +61 3 9611 0174 | M +61 449 404 801
E: pbriglia@sladen.com.au

Jan Harnischmacher
Associate
T +61 3 9611 0158
E joh@sladen.com.au

Andrea Lin
Lawyer
T +61 3 9611 0189
E alin@sladen.com.au

Philippa Briglia