{"id":"BILL-r7437","name":"Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026","slug":"treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026","collection":"bill","jurisdiction":"commonwealth","status":"in_force","isInForce":true,"actNumber":null,"makingDate":null,"administeringDepartment":null,"currentVersion":{"id":446039,"registerId":"commonwealth-BILL-r7437-current","compilationNumber":null,"startDate":"2026-05-05","status":"royal_assent","reasons":null,"registeredAt":null},"sections":[],"analysis":{"summary":{"status_summary":"The bill received royal assent on 13 March 2026 and is now law as Act No. 8 of 2026.","complexity_score":7,"likely_questions":["How is taxable superannuation earnings calculated when a balance crosses the $3 million threshold during the year?","What transitional relief is available for small superannuation funds holding assets at 30 June 2026?"],"complexity_factors":["Two-tier tax on realised earnings with higher-of-two-balances test and indexation","Transitional cost base reset, actuarial attribution for SMSFs and interaction with defined benefit interests"],"plain_english_summary":"The Act introduces a new tax on superannuation earnings for very large balances—an extra levy that raises the effective tax rate on earnings above a $3 million threshold (and a higher tier above $10 million)—with thresholds indexed to CPI and the charge applying to realised earnings. It also increases the low‑income superannuation tax offset and its eligibility, boosting the maximum offset. The changes mainly affect individuals with large super balances, their funds and providers, and require updated reporting and record‑keeping."},"flash_summary":{"complexity_score":9,"scope_assessment":{"changed":false,"description":"The Act remains within the original stated objective of reducing superannuation tax concessions for very large balances, but it substantially refines and extends the original single‑threshold proposal. Key modifications from earlier proposals include adding a second ($10m) tier with a higher extra rate, indexing both thresholds to CPI, switching from an unrealised‑gains to a realised‑earnings base, and adding transitional CGT and deferral mechanics. Those changes expand the technical coverage and administrative detail of the policy but do not change the core policy purpose (targeting concessions on high balances)."},"complexity_factors":["Inserts an entirely new Division 296 into the ITAA 1997 spanning many sections (296‑1 through 296‑265) with multiple subdivisions (296‑A to 296‑G) and numerous cross‑references.","Two‑tier tax structure with indexed thresholds ($3m and $10m) and proportional allocation formulas (sections 296‑30, 296‑35, 296‑40 and 296‑45) with rounding rules and multi‑step calculations.","Multiple new definitions and valuation rules for Total Superannuation Balance (TSB) including a new statutory concept 'total superannuation balance value' and delegated regulation powers to specify valuation methods (section 307‑230A in Schedule 2).","Complex fund earnings attribution rules that differ by entity type (APRA funds, SMSFs, pooled superannuation trusts, RSA providers), including actuarial certificate requirements and regulation‑made attribution methods (section 296‑60 and 296‑65).","Deferred taxation architecture: Division 296 debt accounts, deferral determinations for defined benefit interests, compulsory payment events on end benefits, and special notice/release authority procedures (Subdivision 134 in the Taxation Administration Act 1953; sections 134‑10 to 134‑145).","Transitional rules and CGT adjustments: a one‑year special test for 2026‑27 (Transitional Act section 296‑1), an optional irrevocable cost‑base reset for small funds (Transitional Act section 296‑50), and multi‑year factor rules for net capital gains (Transitional Act section 296‑60).","Integration across many Acts: amendments touch at least nine statutes (ITAA 1997, Income Tax (Transitional Provisions) Act 1997, Taxation Administration Act 1953, Judges’ Pensions Act 1968, Parliamentary Contributory Superannuation Act 1948, Superannuation Acts, Governor‑General Act, DFRDB Act and Superannuation (Government Co‑contribution) Act 2003).","Significant delegated rule‑making: multiple provisions explicitly leave details to regulations or Ministerial instruments (e.g. valuation, attribution, prescribed factors), increasing conditional complexity.","Detailed administrative and penalty/interest mechanics (shortfall interest, general interest charges with a bespoke Division 296 general interest rate — base rate plus 3 percentage points) and new ATO processes for issuing assessments and release authorities (Taxation Administration Act insertions)."],"plain_english_summary":"**What the Act does (mechanically)\n\n- Introduces a new tax regime (Division 296) that reduces the tax concessions applying to earnings on superannuation for individuals with very large total superannuation balances (TSB). The measure operates from the 2026–27 income year (for the main tax) and changes to the Low Income Superannuation Tax Offset (LISTO) start from 1 July 2027 (see Division 296 and Schedule 4).\n\n- Creates two balance thresholds and two extra tax layers on earnings:\n  - A \"large superannuation balance threshold\" of $3,000,000 for 2026–27 (indexed thereafter). If your TSB just before the year or at year‑end exceeds this threshold, a portion of your superannuation earnings becomes subject to an additional 15% tax on top of the existing 15% fund tax (see sections 296‑30, 296‑40 and the Imposition Act referenced by the Division).\n  - A \"very large superannuation balance threshold\" of $10,000,000 for 2026–27 (indexed thereafter). Earnings attributable to the portion of your balance above $10m attract a further additional 10% (so up to 40% nominal tax on those earnings) (see section 296‑35 and 296‑45).\n\n- The tax is applied to realised superannuation earnings (interest, dividends, rent, realised capital gains and similar fund earnings), not to unrealised gains (see Division 296 and the related transitional provisions in the Income Tax (Transitional Provisions) Act 1997).\n\n- The taxable amount for an individual is worked out by taking the proportion of their TSB above each threshold and applying that proportion to their total superannuation earnings for the year (see sections 296‑40 and 296‑45). Example calculations are built into the Division.\n\n- Introduces administrative and collection mechanics:\n  - The ATO (Commissioner) assesses the Division 296 tax, may defer parts of the tax attributable to defined benefit interests to a special Division 296 debt account, and can recover deferred amounts when a superannuation benefit becomes payable (see Subdivision 134‑A to 134‑C in Schedule 1 to the Taxation Administration Act 1953).\n  - Unpaid Division 296 amounts attract a specific interest rate (base interest plus 3 percentage points, applied daily; see the Taxation Administration Act amendments and section 134‑65).\n  - Superannuation providers (including SMSFs) must provide information and may need to rely on actuarial certificates or attribution rules to allocate fund earnings to members (see sections 296‑60, 296‑65 and the regulations powers in 296‑75).\n\n- Transitional and transitional‑relief features:\n  - For 2026–27, liability and the taxable amount are determined by reference to the TSB at 30 June 2027 only (so members could reduce balances before that date to avoid capture in the transitional year) (see Income Tax (Transitional Provisions) Act 1997, Division 296‑A, section 296‑1(2)).\n  - Small super funds may elect a one‑off, irrevocable cost‑base reset of CGT assets to market value at 30 June 2026 for Division 296 purposes (see section 296‑50 in the Transitional Act).\n\n- Changes LISTO (low income super tax offset):\n  - Raises the LISTO eligibility threshold by linking it to the lowest personal income tax threshold (so $37,000 becomes a formula-linked threshold; effect for 2027‑28 is $45,000) and increases the maximum LISTO payment by formula (resulting in a $810 maximum in 2027‑28) (see Schedule 4, amending the Superannuation (Government Co‑contribution for Low Income Earners) Act 2003).\n\n\nWho is directly affected\n\n- Individuals with total superannuation balances above $3 million (and especially above $10 million) — they bear the additional tax on a proportion of their annual super earnings (see sections 296‑30 and 296‑35).\n- Self‑managed superannuation funds (SMSFs), large APRA funds and RSA providers — all must report and attribute a member’s portion of fund earnings under the new rules. SMSFs face new record‑keeping, possible actuarial certificate requirements and an option to elect a CGT cost‑base reset (see sections 296‑65, 296‑70 and the Transitional Act provisions at 296‑50).\n- Trustees, administrators and the ATO — they administer attribution, deferred debt accounts, notices and release authorities (see Schedule 1 amendments to the Taxation Administration Act 1953 and sections 134‑60 to 134‑145).\n\n\nWhy it matters (policy intent and concrete testing of that claim)\n\n- Government policy claim: the object is to better target superannuation tax concessions towards retirement needs by reducing concessions on very large account balances (see section 296‑5 that states the object).\n\n- Testing the claim against practical effects and trade‑offs:\n  - Distributional targeting: The rule narrows concessions only for individuals with very large TSBs (> $3m and > $10m), so the fiscal burden is concentrated on a small group of high‑balance members. The Division is explicitly designed to be proportionate to the fraction of an individual’s balance above the thresholds (see sections 296‑40 and 296‑45).\n  - Behavioral responses and timing risks: The transitional rule for 2026–27 uses end‑of‑year balances only (Transitional Act, section 296‑1(2)), which creates a predictable incentive to reduce balances before 30 June 2027 (explicitly noted in the Act). After the first year the \"higher of opening or closing balance\" test applies, which is explicitly an integrity measure to stop post‑year withdrawals; that test may, however, create timing and market‑loss anomalies where a temporary spike or loss affects liability in successive years (see section 296‑40(2)).\n  - Compliance and administration cost: The Division requires aggregation of earnings across all super interests, attribution of fund earnings to members, actuarial certification for some funds, ATO debt‑accounting and new release‑authority procedures. These are additional compliance costs for trustees, administrators and the ATO (see sections 296‑60, 296‑65, and the new Subdivision 134 in the Taxation Administration Act 1953).\n  - Regulatory discretion and rule‑making levers: The Act leaves substantial matters to regulations and Ministerial legislative instruments — e.g. methods for valuing TSB items, how to attribute earnings for particular interests, prescribed factors for defined benefit interests, and the permitted method for small‑fund CGT adjustments (see sections 307‑230A, 296‑70, 296‑75 and related Transitional Act sections). That creates implementation flexibility but also administrative discretion and rule‑making risk.\n  - Interaction with existing tax features and double‑count concerns: The Division builds fund‑level earnings into its base (including grossed‑up franking credits and foreign income in fund taxable income), which stakeholders flagged may inflate effective tax rates on certain earnings or produce double taxation concerns if foreign tax offsets are not available at the fund level in practice (see section 296‑60 and the explanatory material discussed by stakeholders). The Act preserves the fund’s franking credit benefit but includes the grossed up amounts in the Division 296 earnings base (see section 296‑60(1) and accompanying notes).\n  - Treatment at death and estate timing effects: The Act takes a member’s TSB to be nil after death for Division 296 calculations (section 296‑50), but the debt collection and assessment timing rules and attribution of earnings to surviving recipients can produce immediate liabilities and estate‑administration complexity, which stakeholders warned could be uneven in practice (see Subdivision 296‑C in the Transitional Act and sections 134‑105 to 134‑130 for debt discharge mechanics).\n  - Targeting vs revenue yield trade‑off: Switching from a previously proposed unrealised‑gains basis to a realised‑earnings basis narrows the taxable base (lower revenue), but adding a $10m tier and indexing thresholds adjusts progressivity and preserves some revenue. The Act therefore modifies both base and rates to balance targeting and yield (see Division 296 and Transitional Act notes about deferred notional gains in 296‑65).\n\n\nWho pays, who administers, what behaviour changes\n\n- Who pays: Individuals whose TSB exceeds the thresholds pay Division 296 tax on a proportion of their annual superannuation earnings (sections 296‑15, 296‑40, 296‑45). Deferred amounts attributable to defined benefit interests are tracked in Division 296 debt accounts and become payable when benefits are paid (see Subdivision 134).\n- Who administers/decides: The Commissioner of Taxation issues assessments, keeps Division 296 debt accounts, makes determinations about the portion attributable to defined benefit interests, and notifies superannuation providers. The Minister/regulations set valuation, attribution and technical methods (see sections 134‑10, 134‑25, 296‑75 and 307‑230A).\n- Behavioural changes likely: some taxpayers may accelerate withdrawals or restructure holdings before the transition date; funds and trustees will need to change reporting and attribution practices; defined benefit schemes and SMSFs will need to track and possibly elect transitional CGT choices; there may be changes in fund investment or payout timing to manage the new effective marginal tax rates.\n\n\nPractical implementation risks and costs to flag\n\n- High compliance burden for trustee reporting, actuarial certificates for attribution and ATO administration of debt accounts.\n- Rule‑making and guidance dependency: many technical points are left to regulations and Ministerial instruments (valuation of TSB items, attribution rules), meaning administrative detail will shape outcomes materially.\n- Edge cases: structured settlements, insurance proceeds, family‑law payment splits, death benefits, foreign funds and non‑complying funds have bespoke treatments that create complexity, possible inequities and operational questions (see section 296‑25 on structured settlement exception, 296‑55 on excluded interests and 296‑50 on death).\n- Interaction with existing tax settings (franking credits, foreign tax offsets, transfer balance cap rules) may cause contested or surprising tax outcomes for some earnings streams (see section 296‑60 and related notes).\n\n\nWhere to read the legal text for the details\n\n- New Division 296 in the Income Tax Assessment Act 1997 (sections 296‑1 through 296‑265) and the complementary provisions in the Taxation Administration Act 1953 (Subdivision 134 and other schedule items) contain the detailed calculation, deferral, collection and notice rules.\n- Schedule 2 amends the definition and valuation method for total superannuation balance (see section 307‑230A).\n- Schedule 4 amends the Superannuation (Government Co‑contribution for Low Income Earners) Act 2003 to change LISTO thresholds and the maximum amount.\n\n(For the precise statutory language see the Act: new Division 296, the Income Tax (Transitional Provisions) Act 1997 additions, the Taxation Administration Act 1953 changes, and Schedule 4 for LISTO.)"}},"importantCases":[],"_links":{"self":"/api/acts/treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026","history":"/api/acts/treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026/history","analysis":"/api/acts/treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026/analysis","conflicts":"/api/acts/treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026/conflicts","importantCases":"/api/acts/treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026/important-cases","documents":"/api/acts/treasury-laws-amendment-building-a-stronger-and-fairer-super-system-bill-2026/documents"}}