The passing of the government’s latest super reforms, including the polarising Division 296 tax, will be another test of the superannuation industry’s ability to quickly adapt its systems and processes to implement legislative changes.
It also creates an opportunity for advice businesses to engage affluent clients around retirement and estate planning and develop deep specialisation around navigating Div 296 and its complexities.
On Tuesday night, the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 passed the Senate, after three years of intense opposition from the Coalition and industry lobby groups.
The government announced last October it would index the $3 million threshold, while adding an extra $10 million threshold and indexing both to prevent more Australians from being caught up by bracket creep in the future.
The concessional tax rate will remain 15 per cent for earnings under $3 million, 30 per cent for earnings on balances between $3 million and $10 million, and 40 per cent for earnings on balances above $10 million.
However, over 1.3 million Australians on lower incomes, including around 750,000 women and 550,000 young people under the age of 30, will be better off due to an increase in the low-income superannuation tax offset (LISTO) that was included in the bill.
In a statement, Treasury said the changes would make the super system fairer, more sustainable, and deliver improved retirement outcomes for more than a million Australians.
“The workers who stand to benefit from the LISTO change include over 100,000 sales assistants, over 50,000 administrative workers, over 50,000 aged care workers and disability carers, and over 50,000 childcare workers,” Treasurer Jim Chalmers said.
But on Wednesday, SMSF Association CEO Peter Burgess voiced concerns about the unintended consequences, complexity and long-term effectiveness of Div 296.
“Significant industry effort and costs will now be required to implement and explain a tax that may ultimately have only a limited and diminishing revenue base,” he said.
“The legislation introduces what can only be described as an ugly tax, layering significant complexity across the superannuation system while raising questions about whether the long-term revenue generated will justify the substantial cost of implementation.”
Burgess’ comments echo broader concerns about the super industry’s capacity to efficiently apply and execute the changes, given the dependence of many funds on manual processes and archaic technology.
At a press conference last year, Chalmers batted back questions about the ability of super funds to process the calculation and attribution of earnings to high-balance members, stressing that he was confident of “a way through” after having a conversation with selected funds and peak bodies.
While critics argue the government’s constant tinkering with superannuation undermines confidence and trust in the super system, it also highlights the value and importance of personal financial advice.
Scott Carmichael, partner and head of advisory at Focus Financial-backed private advisory firm Escala, said the Div 296 legislation would prompt advisers to reassess how superannuation fit into their high-net-worth clients’ overall wealth structures.
“Where super balances materially exceed $3 million, and particularly above $10 million, there is likely to be greater focus on the optimal level of capital held within the super system versus outside it,” he said.
“This will depend heavily on an individual’s broader balance sheet and their ability to manage investments outside super where earnings may be taxed at marginal rates.”
Carmichael added that the changes increased the importance of complementary structures such as family trusts, corporate entities, and investment bonds, which could provide flexibility for tax management, income streaming, and estate planning.
“Asset allocation decisions may also come under greater scrutiny,” he said. “Many ultra-high-net-worth investors utilise SMSFs and hold illiquid assets such as property or private market investments that can produce irregular or lumpy earnings profiles. Advisers may increasingly focus on liquidity management and the placement of income-producing versus growth assets across structures.”
While the practical implementation and full impact of the Treasury Laws Amendment Bill will be determined by regulations yet to be released, Burgess warned that compressed timelines would potentially leave affected individuals with little time to understand the changes, increasing the risk of misinformation, non-compliance and unexpected tax outcomes.
Carmichael said that investors and advisers needed to be “much more deliberate” about super and non-super assets but that ultimately super remained one of the most tax-effective long-term savings vehicles, even with the proposed Div 296 measures.
“Superannuation continues to play a central role in retirement planning and intergenerational wealth transfer,” he said.
