Division 296 super tax: the latest proposal at a glance

This update outlines the status of the Labor Government’s proposed changes to superannuation taxation known as Division 296 tax. If enacted, the measure would apply to individuals with super balances above $3 million. For background and context, see our earlier explainer: Division 296 Super Tax Explained (2025)

At present, Division 296 tax has not been passed into law. In the last Parliament, the Government was unable to secure passage through the Senate. However, in the current Parliament, the Government appears to have sufficient support from the cross bench to pass the measure.

In recent times, you may have seen media coverage highlighting that Division 296 tax will target unrealised gains in super. Under that approach, the tax was to be 15% of a portion of the increase in an individual’s superannuation balance between the start and end of the financial year. In conjunction with the current super tax rate of 15%, it was intended that the overall rate of tax on high balance super earnings (including unrealised gains) would be 30%.

However, on 13 October 2025 the Government announced significant changes to the design of Division 296 tax. Most significantly, the Government intends to remove unrealised gains from the scope of the tax. The other key design changes include:

• Applying a 30% tax rate to realised earnings on balances between $3m and $10m (currently the tax rate is 15%).
• Applying a 40% tax rate to realised earnings on balances above $10m (currently the tax rate is 15%).
• Indexing the $3m and $10m thresholds so they will increase over time alongside other key thresholds in the super system.
• The start date of the Division 296 tax has been extended by one year to 1 July 2026 (formerly it was 1 July 2025)

We will continue to watch its progress closely and will provide further updates to our clients in due course.