As accountants who work closely with small and medium business owners, we keep a close eye on any changes in the tax and superannuation landscape that could affect you, your staff, or your business structure. The government’s latest announcement on Division 296 — highlighted by the Institute of Financial Professionals Australia (IFPA) — is one of those important updates worth understanding.
Here’s what’s changed, who’s impacted, and what you should be doing to stay ahead.
What’s Changed?
On 13 October 2025, the Treasurer confirmed major adjustments to how Division 296 will apply:
- Only realised gains will be taxed, not unrealised gains.
- The $3 million total super balance (TSB) threshold will now be indexed in $150,000 increments.
- A new $10 million upper threshold will apply, also indexed in $500,000 increments.
- The start date has been deferred to 1 July 2026, with first assessments expected for the 2027-28 financial year.
- Defined benefit pensions will be included to ensure consistent treatment across structures.
These refinements remove some of the more contentious elements of the original proposal and provide additional planning time — a welcome move for both business owners and advisers.
Who Is Affected?
While most small business owners and employees won’t be directly impacted, the changes matter if you:
- Have a Self-Managed Super Fund (SMSF) with significant assets;
- Hold multiple funds or defined benefit interests; or
- Are planning to sell or restructure assets inside super in the next few years.
For admin and payroll teams, understanding the change helps manage staff questions and internal communications — even though Super Guarantee (SG) contributions remain unaffected.
What This Means For Business Owners & Admin Teams
- Strategic Review
Owners with larger balances should revisit contribution strategies and consider the timing of realising gains. Because only realised earnings are now taxed, there’s scope to plan around asset disposals more effectively. - Cash-flow Planning
Modelling your potential exposure under the new thresholds ensures your fund can handle any future liabilities. This is especially important for SMSFs with illiquid assets. - Payroll & Communication
Prepare simple talking points for staff: the change affects only high-balance members, and does not alter SG rates or processing. Clear messaging will reduce confusion and demonstrate proactive leadership. - Compliance & Advisory Readiness
Use the lead-time wisely. By the end of FY 2026, aim to have your structures reviewed, documentation ready, and reporting processes aligned with the new Division 296 framework.
Action Steps Before 30 June 2026
- Review your total super balance and growth projections.
- Model potential Division 296 exposure across thresholds.
- Assess your fund’s liquidity and investment mix.
- Communicate the key facts with your admin or payroll team.
- Book a tax and super review meeting to finalise your position.
Final Thoughts
The Division 296 update brings welcome clarity — and time — for planning. Even if your fund isn’t immediately affected, understanding the implications now means you’ll be ready when the rules take effect.
If you’d like tailored advice or scenario modelling for your business or SMSF, contact us today for a 30-minute review and practical next steps.