Division 296 Super Tax Update: Major Changes Announced

Federal Treasurer Jim Chalmers has today unexpectedly announced significant and welcome changes to the proposed Division 296 ($3m) superannuation tax regime, providing long-awaited clarity for superannuation members and advisers.

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In addition, a new tax on fund earnings will apply to members with balances over $10 million, introducing an additional 25% tax on those earnings. Combined with the existing 15% tax, this results in a total tax rate of 40% on affected income.
 
These changes represent a more balanced and practical approach, addressing most of the key concerns with the previously announced measures. With clearer rules and more time to plan, members are now in a better position to make informed decisions about their superannuation strategy.
 
As always with proposed new laws, we must await the draft legislation before determining precisely how a particular person is likely to be impacted and whether there are any unannounced ‘surprises’ in the final rules.
 
Contact us to discuss how these changes may affect your superannuation entitlements and estate planning goals.

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