The $3M Super Tax Update: Dead on arrival, or just delayed?

Posted on by Admin

10 September 2025

The fate of the Division 296 tax (Taxation Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023), which aims to tax earnings on superannuation balances of members greater than $3 million up to an additional 15% remains uncertain. The federal Government did not introduce the Bill, nor a modified version, during the recent sitting weeks of Parliament. The next scheduled sitting dates are 8 to 10 October 2025 for the House of Representatives and 27 to 30 October 2025 for the Senate. We will be watching closely to see if any progress is made at that time.

Growing negative media coverage and signs of internal Labor dissent are placing pressure on the government to reconsider the tax. Concerns have mounted that the measure risks political backlash and could impact Australia’s already fragile economy.

The Key Sources of Dissent

Feedback and opposition appear to be developing around several key issues:

  • The unprecedented taxing of unrealised capital gains.
  • The absence of indexation of the $3 million threshold.
  • The timing of the first payment date in 2027, which coincides with an election campaign.

Beyond the politics, industry voices highlight deeper risks:

  • A chilling effect on innovation, productivity, and aspiration.
  • Discouragement of SMSF-led venture capital and start-up funding.
  • The practical and technical challenges of effectively “backdating” this tax, as the first valuation date for superannuation balances is 1 July 2025 under the current proposal and previously introduced draft legislation.

New Developments in the Debate

Adding fuel to the conversation, Liberal Victorian Senator Jane Hume introduced a Private Member’s Bill on 4 September 2025. The proposal allows splitting of superannuation balances between spouses, targeting the gender super gap. Framed as a matter of fairness, equity, and recognition of unpaid work and broken career patterns – particularly affecting women – it has received attention, with consideration that it may thwart some of the intentions of the Division 296 tax where it was to pass.  Accordingly, how this proposal would co-exist with a Division 296 framework remains contentious.

Next Steps

For now, no action is required. Please refrain from making any impulsive actions, particularly withdrawing of benefits from superannuation (where you may be eligible), or making substantial changes to your investment strategy solely in response to this legislation.

  • The wisest course is patience. We must await reintroduction of the legislation and see whether amendments address the clear inequities raised by multiple industry bodies and commentators.
  • We continue to recommend accurate market valuations of unlisted assets (such as property and unlisted shares and trusts) held within superannuation funds at 30 June 2025, as this remains the most likely start date if introduced.

We remain on top of developments and will keep you updated.

Author:
Jemma Sanderson, Director

This newsletter is current as of 10 September 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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