Key Points:
- The proposed Division 296 tax on super balances over $3 million was not passed before the election was called
- The tax includes a controversial measure to tax unrealised gains at a higher rate (30%)
- The Coalition has pledged to repeal the tax if it’s legislated before the election.
Superannuation policy has become a central issue in the 2025 federal election.
The future of the government’s contentious Division 296 tax has been thrown into uncertainty after Prime Minister Anthony Albanese called a federal election for 3 May 2025, before the legislation could be voted on in the Senate.
Division 296, widely known as the “$3 million super tax” was slated to double the tax rate on earnings for superannuation balances exceeding $3 million from 15% to 30%. While the government has framed the measure as a “modest change” to improve the sustainability of the super system, many in the SMSF sector argue that it breaks earlier election promises not to alter superannuation settings.
The Bill’s failure to progress through the Senate prior to the election call highlights continued division over its key features, particularly the inclusion of unrealised capital gains and the lack of indexation of the $3 million threshold.
The government has made clear in the recent Federal Budget that it remains committed to the tax. However, with Parliament now dissolved and the election looming, the fate of Division 296 will ultimately rest on the composition of the next government.
The Coalition has promised to repeal the measure if it is elected and Division 296 has already been enacted. This pledge, along with the tax’s controversial provisions, has made superannuation policy a flashpoint in the 2025 federal election.
As campaigning ramps up, industry groups are urging all parties to provide greater transparency on their superannuation policy positions and to work collaboratively on a tax framework that is equitable, sustainable, and practical for both advisers and retirees.
At Omnis our SMSF team is highly skilled at navigating the complexities of SMSF regulations to help our clients achieve financial security and compliance. Contact us in West Perth on 08 9380 3555.
