Division 296 – No Longer a Threat – or Is It?

04 April 2025

With the calling of the election for May 3, the  proposed Division 296 legislation (additional taxation on superannuation accounts greater than $3 million) has lapsed. As Parliament is in caretaker mode due to the election, all proposed bills and other business before the House of Representatives (HOR) and Senate expire.

What does this mean?

Although the Bill has lapsed due to the election, the Australian Labour Party (ALP) has indicated that where they are returned to Government, they will be re-introducing the Bill.  This is particularly given that in their recent federal Budget they accounted for the revenue that would be generated from this measure in their forward estimates.

In the lead up to the election announcement, the Bill had stalled in the Senate, where it was considered that the Government lacked the support for it to be passed, and was the reason that it hadn’t been read a second time.  In order to pass in the Senate, a certain number of cross-bench Members would be required to vote in favour of the Bill, whereby that support hadn’t been secured. 

One of the biggest criticisms of this proposed legislation is that unrealised capital gains are subject to taxation. Therefore, if the proposed policy remains as per the current draft Bill, the ALP will need to justify that approach through the course of their election pitch, which may or may not resonate positively with voters.  If the ALP is successful, as the Bill has lapsed, they would need to reintroduce the Bill and effectively commence the entire process again.  This involves having the Bill read and passed in the HOR again, and where that is successful, the Bill would then proceed to be read, debated and require passage in the Senate.  Where there is a minority Government, or cross-bench Members are required to vote positively, that may remain a challenge to overcome for an ALP Government.

Next Steps

For now, it remains a “Watch this Space” concept.  Depending on the outcome of the election, and in fact the progress of the election and any polling that may indicate that the policy is a barrier to a win and may therefore be entirely shelved, there is no action to take.  

Current polling is indicating that a minority Government may be the outcome, however until polling day, we will not know the result. 

Where the Bill is ultimately passed, it is also highly likely that the introduction will be deferred until 1 July 2026, as none of the requisite systems are in place for the administration of the provisions. This is particularly where any legislation is unlikely to be introduced, let alone pass until the first sitting week of the new Parliament after 3 May. 

We will keep you updated, including whether any action is required to be taken. 

If you would like some more information on these proposed (now lapsed) provisions, please refer to our previous newsletters here or feel free to contact one of our team.

This newsletter is current as of 04 April 2025, however, please note that announcements and changes are being made by the Government and the ATO regularly, and we expect that the tax and business-related responses will continue to evolve.  Before acting upon the content of this newsletter, please contact us to discuss how the above applies to your specific circumstances.

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