More Changes to DIV296 the Second Super Tax

A “second super tax” takes shape: what’s changing with Div 296

The government’s flagship reform to high-balance superannuation accounts is the Div 296 tax, intended to apply to individuals with total superannuation balances (TSB) above $3 million. Originally the design introduced a 15 % additional tax on earnings (including unrealised gains) attributed to the portion of a balance above $3 m.
However, under recent industry and political pressure the government appears to be modifying both the formula and mechanics of how the tax will operate.

Key reforms under review

Here are the most important changes now on the table:

• Taxing only realised earnings

• Introducing a higher threshold or tiered tax rate

• Indexing the $3 m threshold to inflation

• Implementation deferred

Why it matters (and how it may affect you)

For individuals (including SMSF trustees) with superannuation balances approaching or above $3 million, these changes introduce considerable strategic implications:

• Valuation / liquidity risks

• Bracket creep risk

• Planning window

• Interpretation & compliance complexity

While the core concept of Div 296 remains — an extra tax on superannuation earnings for those with high balances — the mechanics are shifting under pressure. The government appears to be responding to industry concerns around fairness (unrealised gains), indexing, and implementation timing. For those likely impacted, this is not a reason to ignore the reform: rather, it signals the time to engage with advisors, update strategy, and model scenarios under both the original and revised proposals.