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).
Creates two balance thresholds and two extra tax layers on earnings:
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).
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).
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).
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.
The Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026, Act No. 8 of 2026, received royal assent on 13 March 2026. Schedule 1 inserts new Division 296 into the Income Tax Assessment Act 1997 to impose an additional tax on superannuation earnings for individuals whose total superannuation balance exceeds the large superannuation balance threshold. Item 14 of Schedule 1 adds sections 296-15 to 296-75, creating liability for Division 296 tax where taxable superannuation earnings arise. The large superannuation balance threshold starts at $3 million for the 2026-27 income year under section 296-30, with the very large superannuation balance threshold at $10 million under section 296-35. Both thresholds are indexed annually to the consumer price index in $150,000 and $500,000 increments respectively from the 2027-28 year. Earnings above $3 million up to $10 million attract an additional 15 per cent tax, producing a nominal 30 per cent rate on the taxable portion. Earnings above $10 million attract an additional 25 per cent tax, producing a nominal 40 per cent rate. The tax applies only to realised earnings such as interest, dividends, rent and realised capital gains. Schedule 2 amends the definition of total superannuation balance in section 307-230 of the Income Tax Assessment Act 1997 and inserts section 307-230A to prescribe total superannuation balance value methods, including regulatory valuation for defined benefit interests. Schedule 3 clarifies that Subdivision 293H overrides subsection 73(3A) of the Australian Capital Territory (Self-Government) Act 1988. Schedule 4 amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 to raise the low income superannuation tax offset eligibility threshold from $37,000 to the lowest personal income tax threshold after the tax-free threshold, currently $45,000, and to increase the maximum offset from $500 to $810 from 1 July 2027. Consequential amendments appear in the Defence Force Retirement and Death Benefits Act 1973, Governor-General Act 1974, Judges Pensions Act 1968, Parliamentary Contributory Superannuation Act 1948, Superannuation Act 1976, Superannuation Act 1990 and Taxation Administration Act 1953 to accommodate release authorities and debt accounts for Division 296 tax. The separate Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 imposes the tax for constitutional reasons under section 55 of the Constitution.
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Introduced with the Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026 to reduce the tax concessions available to individuals with a total superannuation balance (TSB) exceeding $3 million, the bill amends 9 Acts to makes consequential and miscellaneous amendments. Also amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 to link the low income superannuation tax offset (LISTO) eligibility threshold to the relevant personal income tax threshold and link the maximum LISTO amount to the superannuation guarantee charge percentage.
Parliamentary progress
Progress
House of Representatives
Introduced and read a first time
11 Feb 2026
Second reading moved
11 Feb 2026
Second reading debate
03 Mar 2026
Second reading debate
04 Mar 2026
Second reading agreed to
05 Mar 2026
Consideration in detail debate
05 Mar 2026
Third reading agreed to
05 Mar 2026
Senate
Introduced and read a first time
10 Mar 2026
Second reading moved
10 Mar 2026
Second reading debate
10 Mar 2026
Second reading agreed to
10 Mar 2026
Third reading agreed to
10 Mar 2026
Finally passed both Houses
10 Mar 2026
Assent
Act no: 8
Year: 2026
13 Mar 2026
Notes
Documents and transcripts
Text of bill
First reading
As passed by both Houses
Explanatory memoranda
Explanatory memorandum
Transcript of speeches
All second reading speeches
Minister's second reading speech
Proposed amendments
House of representatives
Introduces administrative and collection mechanics:
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).
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).
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).
Transitional and transitional‑relief features:
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)).
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).
Changes LISTO (low income super tax offset):
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).
Who is directly affected
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).
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).
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).
Why it matters (policy intent and concrete testing of that claim)
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).
Testing the claim against practical effects and trade‑offs:
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).
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)).
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).
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.
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).
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).
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).
Who pays, who administers, what behaviour changes
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).
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).
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.
Practical implementation risks and costs to flag
High compliance burden for trustee reporting, actuarial certificates for attribution and ATO administration of debt accounts.
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.
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).
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).
Where to read the legal text for the details
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.
Schedule 2 amends the definition and valuation method for total superannuation balance (see section 307‑230A).
Schedule 4 amends the Superannuation (Government Co‑contribution for Low Income Earners) Act 2003 to change LISTO thresholds and the maximum amount.
(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.)
Main concepts
Total superannuation balance is the sum of the total superannuation balance values of each superannuation interest held by an individual, calculated at the greater of the balance just before the start of the income year or at the end of the year for Division 296 purposes. Taxable superannuation earnings represent the proportion of an individual's total superannuation earnings that corresponds to the percentage of the total superannuation balance exceeding the large superannuation balance threshold. Division 296 fund earnings are derived from the relevant taxable income or loss of the superannuation entity, adjusted by adding back net exempt current pension income, deducting assessable contributions and incorporating grossed-up franking credits and foreign income. Relevant superannuation earnings for a superannuation interest are attributed on a fair and reasonable basis for large APRA-regulated funds or by actuarial certificate for small superannuation funds. The large superannuation balance threshold and very large superannuation balance threshold trigger tiered additional taxation. Division 296 excluded interests cover constitutionally protected funds for state higher-level office holders, judicial pensions under the Judges Pensions Act 1968 and non-complying superannuation funds. A Division 296 debt account tracks deferred tax attributable to defined benefit interests until an end benefit becomes payable. The low income superannuation tax offset offsets the 15 per cent contributions tax for eligible low-income earners and is now linked to personal income tax thresholds and the superannuation guarantee charge percentage.
Who it affects
Individuals with a total superannuation balance exceeding $3 million at the relevant test time are subject to Division 296 tax on the proportion of their realised superannuation earnings above that threshold, with a higher rate applying above $10 million. The measure is expected to affect less than 0.5 per cent of Australians with superannuation accounts. Self-managed superannuation fund trustees face additional compliance obligations, including obtaining actuarial certificates each year to attribute earnings and the option to elect a one-off cost base reset for all assets at 30 June 2026 market value. Large APRA-regulated funds must attribute taxable superannuation earnings on a fair and reasonable basis to affected members. Defined benefit scheme members have their interests valued according to regulatory methods or actuarial factors. Low-income earners with adjusted taxable income up to $45,000 from 1 July 2027 become eligible for an increased low income superannuation tax offset of up to $810. Child recipients of superannuation income streams and individuals who have received structured settlement contributions are exempt from Division 296 tax. Certain Commonwealth, Australian Capital Territory and Northern Territory judges and state higher-level office holders have their interests in constitutionally protected funds excluded from the tax calculation, although those balances still count toward the total superannuation balance. Temporary residents who depart Australia and receive a departing Australia superannuation payment may claim a refund of any Division 296 tax paid. Executors and beneficiaries of deceased estates may encounter Division 296 tax liabilities in the year of death from 1 July 2027 onward where balances exceed the thresholds.
What people will want to know
Individuals will want to know how to calculate their taxable superannuation earnings by subtracting the large superannuation balance threshold from their total superannuation balance reference amount, dividing by that reference amount and multiplying the resulting percentage by their total superannuation earnings for the year. They will want to understand that the tax is payable on realised earnings only and that a transitional rule for the 2026-27 year uses only the 30 June 2027 balance. SMSF members will want to know whether to elect the cost base reset for capital gains tax assets by the due date of the 2026-27 tax return and that the election applies to all assets, not selectively. People will want to know that Division 296 tax is assessed by the Commissioner of Taxation and that payment is due 84 days after the notice of assessment, unless deferred to a Division 296 debt account for defined benefit interests. They will want to know the treatment on death, where total superannuation balance is taken to be nil after death for most purposes but the tax can still apply in the year of death from 2027-28 and may affect reversionary pensions. Low-income earners will want to know that the low income superannuation tax offset threshold rises to $45,000 and the maximum payment rises to $810 from 1 July 2027. Individuals with foreign income or franked dividends will want to know that grossed-up amounts are included in Division 296 fund earnings. Executors will want to know that release authorities can be issued to pay Division 296 debt account discharge liability when an end benefit becomes payable.
Status and what happens next
The bill was introduced in the House of Representatives on 11 February 2026, passed both Houses on 10 March 2026 and received royal assent on 13 March 2026 as Act No. 8 of 2026. Sections 1 to 3 commenced on royal assent. Schedule 1 commenced on 1 April 2026 at the same time as the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026. Schedules 2 and 3 commenced on 1 April 2026. Schedule 4 commences on 1 July 2027. The Act is now law and the first Division 296 tax assessments will relate to the 2026-27 income year, with determinations of deferred amounts and debt accounts issued by the Commissioner as assessments are made. No further parliamentary proceedings are required. The Commissioner will issue guidance and approve forms for elections, release authorities and end benefit notices. Superannuation providers must notify the Commissioner within 14 days of an end benefit becoming payable from an interest for which a Division 296 debt account is kept.
Powers, duties and rights created
The Commissioner of Taxation gains power to assess Division 296 tax, maintain Division 296 debt accounts, issue release authorities and determine the amount of tax deferred to a debt account under sections 134-10 and 134-20 of Schedule 1 to the Taxation Administration Act 1953. The Commissioner must give notice of determinations and may remit interest on debt accounts in special circumstances or following a deferral reversal. Superannuation providers have a duty to give end benefit notices in the approved form within 14 days of a request or the benefit becoming payable. Trustees of small superannuation funds have a duty to keep records of cost base reset elections for five years after the last relevant capital gains tax event. Individuals gain the right to object against determinations and assessments under Part IVC of the Taxation Administration Act 1953 and to apply for refunds of Division 296 tax upon receiving a departing Australia superannuation payment. Trustees gain the right to elect a cost base reset for all assets of a small superannuation fund. The Minister gains power to determine age factors for pension reductions following release authority payments and to specify superannuation benefits excluded from the definition of Division 296 end benefit. Regulations may prescribe attribution methods, total superannuation balance values and modifications for defined benefit interests.
Money, penalties and enforcement
Division 296 tax is imposed at an additional 15 per cent on the taxable superannuation earnings proportion above $3 million and an additional 25 per cent on the proportion above $10 million. Unpaid assessed Division 296 tax or shortfall interest charge attracts the general interest charge at the Division 296 general interest charge rate, which is the base interest rate plus three percentage points. Division 296 debt account discharge liability becomes due 21 days after the end benefit is paid. General interest charge applies to unpaid discharge liability. An administrative penalty applies under section 288-25 of Schedule 1 to the Taxation Administration Act 1953 if a trustee of a small superannuation fund fails to keep or retain required records of a cost base reset election. The Commissioner may release amounts from superannuation interests to pay deferred Division 296 tax or discharge liability. Refunds of Division 296 tax paid are available to departing temporary residents, reduced by any prior refunds. The tax does not apply where imposition would exceed Commonwealth legislative power under the severability provision in the Imposition Act.
Pressure points and controversies
The requirement that small superannuation funds apply any cost base reset election to all assets rather than asset by asset creates potential unfairness where some assets have market values below cost base. The higher of opening or closing total superannuation balance test for the reference amount can produce outcomes where temporary balance spikes or market losses affect liability in unintended ways. Attribution of earnings for small superannuation funds requires actuarial certificates each year, adding cost and complexity not faced by large funds in the same way. Inclusion of grossed-up franking credits and foreign income in Division 296 fund earnings can produce effective tax rates above the nominal 30 per cent or 40 per cent for some funds, particularly pension-phase interests. Application of the tax in the year of death from 2027-28 can result in liability for estates after assets have been distributed or for surviving spouses who receive reversionary pensions, raising questions of fairness and timing. The exclusion of unrealised gains removes one source of complexity present in earlier proposals but reduces expected revenue. Professional bodies representing self-managed superannuation funds have described the measure as unnecessary and inequitable in some outcomes, while the large superannuation sector supports the tiered and indexed approach. The policy trades greater progressivity at very high balances against increased compliance obligations for affected funds and their members.
What changes if it passes
Now that the Act has passed and received royal assent, individuals with total superannuation balances above the indexed $3 million threshold pay additional tax on the proportion of their realised superannuation earnings above that threshold from the 2026-27 income year, with a further tier at $10 million. Superannuation funds must calculate and report relevant superannuation earnings and Division 296 fund earnings, with small funds obtaining actuarial certificates. Defined benefit interests have tax deferred to debt accounts until an end benefit is paid. The low income superannuation tax offset threshold and maximum amount increase from 1 July 2027, extending concessional treatment to more low-income earners. Release authorities and debt account mechanisms now exist for Division 296 tax alongside existing Division 293 arrangements. Total superannuation balance calculations incorporate new regulatory valuation options for certain interests. The superannuation system moves closer to the legislated objective of preserving savings for dignified retirement in an equitable and sustainable way by reducing the value of tax concessions on very large balances while preserving concessions for the great majority of members.
Social post angles
Division 296 tax thresholds explained: the $3 million and $10 million large superannuation balance thresholds are indexed to CPI from 2027-28 and trigger tiered additional tax only on realised earnings. SMSF cost base reset election: trustees of small superannuation funds may elect by the 2026-27 return due date to reset all asset cost bases to 30 June 2026 market values for Division 296 purposes only. Low income superannuation tax offset changes: from 1 July 2027 the offset threshold rises to $45,000 and the maximum payment rises to $810, linked to personal tax thresholds and the superannuation guarantee rate. Death and Division 296 tax: from the 2027-28 year the tax can apply in the year of death and may affect reversionary pensions or estates where balances exceed thresholds. Defined benefit debt accounts: tax on earnings from defined benefit interests is deferred until an end benefit becomes payable, with interest accruing on the debt account balance. Franking credits and Division 296: grossed-up franking credits form part of Division 296 fund earnings, ensuring the headline tax rate applies to the full company profit distributed. Release authorities for Division 296: the Commissioner may issue release authorities to pay deferred tax or discharge liability when an end benefit is paid from the relevant interest. Transitional 2026-27 rule: only the 30 June 2027 total superannuation balance determines liability in the first year, allowing members to reduce balances before that date to avoid the tax.
2nd reading amendment
WILSON, Tim, MP
Detail - Crossbench
SPENDER, Allegra, MP
Detail - Opposition
YOUNG, Terry, MP
Senate
2R - One Nation [sheet 3692]
HANSON, Sen Pauline
CW - Australia's Voice [sheet 3643]
PAYMAN, Sen Fatima
CW - Pauline Hanson's One Nation [sheet 3690]
HANSON, Sen Pauline
Schedules of amendments
No documents at present
Bills digest
Bills Digest
Notes
An electronic version of this Act is available on the Federal Register of Legislation (www.legislation.gov.au)
Schedules 1-3 of the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 amend several Commonwealth statutes to reduce the tax concessions available to individuals with a total superannuation balance of more than $3 million. A further reduction would apply to individuals with a total balance of more than $10 million. The measure would apply from income years starting on 1 July 2026.
Schedule 4 amends the low income super tax offset (LISTO) by increasing the income threshold from $37,000 to $45,000 and raising the maximum LISTO payment from $500 to $810. These amendments would apply from 1 July 2027.
The Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026 implements the measure in Schedules 1‑3. It is a separate Bill for constitutional reasons.
The Government previously attempted to reduce tax concessions available to individuals with a total superannuation balance of more than $3 million through the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 (the 2023 Bills). These Bills lapsed at the end of the 47th Parliament.
The measure proposed in the current Bills differs in some respects from the previous Bills, including through proposing a further reduction of tax concessions available to individuals with total superannuation balances exceeding $10 million; by providing for both the $3 million and $10 million thresholds to be indexed to the Consumer Price Index (CPI); and removing the proposal to tax notional capital gains and losses.
While regarding the new Bills as improving on the 2023 Bills, some professional bodies and self-managed superannuation fund representative organisations consider the measure is unnecessary, too complex, and creates inequitable outcomes. In contrast, the large superannuation sector supports the measure.
At the time of writing, the Bills had not been referred to or reported on by any parliamentary committees.
Introductory Info
Date of introduction: 11 February 2026
House introduced in: House of Representatives
Portfolio: Treasury
Commencement:
The Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026 commences on the first 1 January, 1 April, 1 July or 1 October to occur after Royal Assent.
Sections 1 to 3 of the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 commence on Royal Assent. Schedule 1 commences at the same time as the Imposition Bill. Schedules 2 and 3 commence on the first 1 January, 1 April, 1 July or 1 October to occur after Royal Assent. Schedule 4 commences on 1 July 2027.
Purpose and history of the Bills
The purpose of the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 (the Bill) is to amend taxation and superannuation law to ensure that concessions within the system are better targeted and more closely aligned with the legislated objective of superannuation.
The Bill proposes two key changes.
Firstly, it would insert new Division 296 into the Income Tax Assessment Act 1997 (ITAA 1997), to reduce the tax concessions available to individuals with total superannuation balances exceeding $3 million. This would apply from income years starting on 1 July 2026.
Secondly, it would amend the low income super tax offset (LISTO) by increasing the income threshold from $37,000 to $45,000 and raising the maximum LISTO payment from $500 to $810. These amendments would apply from 1 July 2027.
The purpose of the Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026 (the Imposition Bill) is to impose the additional tax on large superannuation balances.
The Government previously attempted to reduce tax concessions available to individuals with a total superannuation balance of more than $3 million through the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 (the 2023 Bills). These Bills lapsed at the end of the 47th Parliament.
The measure proposed in the current Bills differs in some respects from the previous Bills, including through proposing a further reduction of tax concessions available to individuals with total superannuation balances exceeding $10 million; by providing for both the $3 million and $10 million thresholds to be indexed to the Consumer Price Index (CPI); and removing the proposal to tax notional capital gains and losses. A Bills Digest was prepared for the 2023 Bills and the present Bills Digest draws on its content as relevant.
The proposed change to the LISTO was announced in October 2025 and has not been introduced previously.
Structure of the Bills
The Bill has 4 Schedules which amend existing Commonwealth statutes and are scheduled to commence as set out in Table 1 below:
Table 1 Schedules and commencement dates
Schedule 1 inserts new Division 296 into the Income Tax Assessment Act 1997 (ITAA 1997) and amends the Defence Force Retirement and Death Benefits Act 1973 (DFRDB Act), the Governor-General Act 1974, the Income Tax (Transitional Provisions) Act 1997, the Judges’ Pensions Act 1968, the Parliamentary Contributory Superannuation Act 1948, the Superannuation Act 1976, the Superannuation Act 1990 and the Taxation Administration Act 1953 (TA Act) to insert references to new Division 296 of the ITAA 1997.
At the same time as the Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026. The Imposition Bill will commence on the first 1 January, 1 April, 1 July or 1 October after Royal Assent.
Schedule 2 amends the definition of Total Superannuation Balance (TSB) in the ITAA 1997 and inserts a reference to the TSB value into the TA Act.
The first 1 January, 1 April, 1 July or 1 October after Royal Assent.
Schedule 3 amends the ITAA 1997 to clarify that Subdivision 293H of that Act overrides subsection 73(3A) of the Australian Capital Territory (Self-Government) Act 1988.
The first 1 January, 1 April, 1 July or 1 October after Royal Assent.
Schedule 4 amends the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 to align the low income tax offset (LISTO) with broader income tax and superannuation settings.
1 July 2027.
The measures are presented in two Bills - an assessment Bill and an imposition Bill. This is because the Constitution requires that laws imposing taxation deal only with the imposition of taxation (section 55). Under section 6 of the Imposition Bill, Division 296 tax does not apply if the imposition of the tax on the individual exceeds the legislative power of the Commonwealth.
Background
The modern Australian retirement income system comprises three elements, which have become known as the three pillars:
a publicly provided means tested age pension
mandatory private superannuation saving and
voluntary saving (including voluntary superannuation saving) (p. 65).
Compulsory superannuation was introduced in Australia in 1992. When it was first introduced, the Superannuation Guarantee was 3% of wages. While this was a big change, in November 1991, 71% of employed persons were covered by superannuation (p. 13). Over time superannuation was subject to various tax concessions (pp. 78-79). Until 2007 there were no limits on non-concessional (after tax) contributions to superannuation and so some people accumulated very large balances. In 2007, a limit of $50,000 on concessional contributions was also introduced. Changes have been made to both the concessional and non-concessional caps since 2007, but both are indexed. The transfer balance cap, introduced in 2017, restricts the amount that can be transferred into the tax‑free retirement phase.
There have been equity concerns about disparities in superannuation savings and earnings for some time. In 2013, the Labor Government proposed a 15% tax on superannuation income streams above $100,000. Treasury notes in its impact analysis for the current Bills, ‘the concession afforded to the earnings of high income earners is greater than the concession afforded to individuals on lower incomes … the top 20 per cent of income earners received around 55 per cent of the total benefit … in 2022-23.’ (Explanatory Memorandum (EM), pp. 76-77)
The Government’s policy intent in relation to superannuation is that it is designed to provide for a person’s retirement rather than acting as a wealth creation vehicle. Consistently with this, the Government has implemented an objective for superannuation in its Superannuation (Objective) Act 2024, as follows: ‘The objective of superannuation is to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’ (subsection 5(1)).
The intention to change the concessional tax rate applied to earnings on superannuation balances over $3 million was announced by the Treasurer on 28 February 2023 and included in the 2023-24 Budget as the Better Targeted Superannuation Concessions measure (Budget Paper No. 2, p. 15). The Budget Paper stated the rationale for the measure as follows: ‘This reform is intended to ensure generous superannuation concessions are better targeted and sustainable.’ When introducing the 2023 Bills, the Assistant Treasurer advised that the change was expected to apply to less than 0.5% of Australians with a superannuation account.
In November 2023, the Government introduced the Treasury Laws Amendment (Better Targeted Superannuation Concessions and Other Measures) Bill 2023 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2023 (the 2023 Bills). As noted in the Bills Digest for the measure, the Bills were extensively criticised by stakeholders, in particular for a lack of indexation of the $3 million threshold, and the proposed taxation of notional capital gains and losses.
Committee consideration of the 2023 Bills
In May 2024, the Senate Economics Legislation Committee reported on its inquiry into the 2023 Bills. The Committee said it ‘strongly supports the reforms to superannuation tax concessions that will ensure they are fairer, more sustainable, and better targeted’ (p. 48). It noted that only a very small proportion of account holders would be affected (p. 49). It supported the provisions of the Bills (including the lack of indexation of the $3 million threshold and the taxation of unrealised gains) and recommended (p. 51) that the Bills be passed.
Coalition Senators strongly opposed the Bills, characterising the measure as a broken election promise and an unprecedented tax on unrealised capital gains. Coalition Senators criticised the lack of indexation of the $3 million threshold, stating that it would ‘capture hundreds of thousands of Australians, particularly young Australians, into the future’ (p. 53).
Greens Senators criticised the scale and direction of Australia’s current superannuation concessions, but argued the Bills were far too modest and would not meaningfully disrupt what they characterised as a system functioning as ‘Australia’s premier tax haven for wealth accumulation’ (p. 81).
The Greens recommended:
that the threshold for the reduced tax concessions be lowered from $3 million to $2 million, indexed in line with inflation (p. 82)
the Government prepare comprehensive legislation to restore superannuation’s purpose to support working people’s dignified retirement by removing and reducing all the tax settings that disproportionately benefit the highest income earners and asset owners (p. 85)
the Government ensure the actuarial formula for taxing defined benefit schemes does not result in women being taxed higher than men as a result of their longer life expectancy (p. 86)
the Government address the concerns regarding the exemption on the prohibition for super funds to borrow to finance investments in section 67A of the Superannuation Industry (Supervision) Act 1993 (limited recourse borrowing arrangements) on a prospective basis (p. 90)
The 2023 Bills lapsed on prorogation of the 47th Parliament.
Changes to the measure
On 13 October 2025, the Government announced changes to the Better Targeted Superannuation Concessions measure, including an additional threshold of $10 million; indexation of the $3 million and $10 million thresholds; and the restriction of the tax to realised earnings.
On 19 December 2025, Treasury opened consultation on a revised exposure draft, the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025. Treasury also provided guidance on proposed regulations to be made under the Bill. Consultation closed on 16 January 2026. Treasury published 83 responses. The Bill as introduced largely reflects the exposure draft, with some adjustments in response to stakeholder feedback.
Changes to the LISTO
On 13 October 2025, the Government announced it would introduce changes to the Low Income Superannuation Tax Offset (LISTO), by increasing the income threshold from $37,000 to $45,000 and the maximum LISTO payment from $500 to $810.
Key changes from the 2023 Bills
The key changes between the Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 and the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 (the 2026 Bill) are:
the 2026 Bill explicitly removes the taxation of unrealised gains, switching instead to a realised‑earnings base
the 2026 Bill adds a new threshold of $10 million, with a higher nominal tax rate of 40% applying to earnings above that level
the $3 million (and $10 million) thresholds are now indexed, consistent with the existing approach for the transfer balance cap, with the aim of ensuring the tax does not apply to more people over time simply due to inflation
there is a one‑off adjustment (taxpayers must opt in) to remove pre‑implementation gains from Division 296 earnings
Division 296 applies in the year of death if the person dies on or after 1 July 2027
the 2026 Bill incorporates changes to the LISTO.
Policy position of non-government parties/independents
In October 2025, the Australian Financial Review reported that the Coalition was poised to vote against Labor’s modified proposal, on the basis that supporting the policy would contravene its renewed commitment to be the party of lower taxes.
On 11 February 2026, the Greens’ economics spokesperson Senator Nick McKim told the ABC that the Greens had not come to a ‘final position’ but that there was a pathway for ‘a constructive approach’. According to the report:
Senator McKim said the Greens were working up negotiating proposals. A spokesperson emphasised these had not been finalised, but that one option being considered was a 45 per cent tax instead of 40 per cent on balances above $10 million.
By lining up with the top income tax rate of 45 per cent, this would effectively mean a proportion of earnings above $10 million receive no tax concession , a proposal that would function as an effective "cap" on concessional super as some have advocated.
At the time of writing, there appear to be no publicly available statements from the other parties or the independents concerning the Bill.
Key issues and provisions
Overall stakeholder views
While several stakeholders regard the revised measure as an improvement over its predecessor, professional bodies such as the SMSF Association (SMSFA), the Institute of Financial Professionals Australia (IFPA), the Tax Institute (TIA) and Chartered Accountants Australia and New Zealand, CPA Australia and the Institute of Public Accountants, (the joint bodies) considered that the exposure draft Bill was unnecessary, too complex, and would create inequitable outcomes. In contrast, the Association of Superannuation Funds of Australia (ASFA) (p. 2) and the Australian Council of Trade Unions (ACTU) (p. 4) support the amended Division 296 measure. The Financial Services Council (FSC) considered the revised framework ‘broadly workable in concept’ (p. 1).
Tiered reduction in tax concessions
Item 14 of Schedule 1 inserts proposed Division 296 - Better targeted superannuation concessions into the ITAA 1997, which will impose a two-tier reduction in the tax concessions available for individuals with a total superannuation balance (TSB) above $3 million, from the 2026-27 tax year onwards:
earnings on the portion of a member’s TSB above $3 million and up to $10 million would be taxed at an additional 15% (in addition to the existing 15% tax on the fund) - an overall nominal tax rate of 30% on a member’s taxable superannuation earnings (TSE)
earnings on the portion of a member’s TSB above $10 million would be taxed at an additional 25% (on top of the existing 15% fund tax) - an overall nominal tax rate of 40% on a member’s TSE.
The lower threshold is referred to as the large superannuation balance threshold (LSBT) (proposed section 296-30) and the higher threshold is referred to as the very large superannuation balance threshold (proposed section 296-35).
Some stakeholders (eg ASFA (p. 2)) supported the tiered approach. Pitcher Partners noted its greater progressivity at the top end and said: ‘The move to a tiered, indexed structure provides greater fairness and predictability, albeit at the cost of higher marginal rates for ultra-high-balance members’.
Under Schedule 1, items 14 and 17 to 22, the $3 million threshold would be indexed to the Consumer Price Index (CPI) in $150,000 increments, while the $10 million threshold would be indexed to the CPI in $500,000 increments.
The tax will only apply to realised earnings,such as interest, dividends, rent and realised capital gains,replacing the earlier total-super-balance change method. This means the Government will raise less revenue than originally expected, although the introduction of the $10 million tier may offset the revenue impact of removing the unrealised gains component.
Calculating taxable superannuation earnings
According to the Explanatory Memorandum (EM), paragraph 1.33, an individual has taxable superannuation earnings (Schedule 1, item 14, proposed subsection 296-40(1) of the ITAA 1997) for an income year if their TSB at the end of the income year, or just before the start of the year, is greater than the $3 million threshold and their superannuation earnings for the year is greater than nil. The approach of using the greater of the individual’s TSB at the end of the year or their TSB just before the start of the year (the ‘higher of two balances’ approach, which does not apply for the first year of the tax) is an integrity measure designed to stop people avoiding the tax by drawing down their superannuation. The greater of the individual’s TSB at the end of the year or their TSB just before the start of the year is referred to as the TSB reference amount (proposed subsection 296-40(2)).
In its submission on the exposure draft Bill, the SMSFA argued that using the greater of the opening or closing TSB creates inequitable and unintended outcomes,for example, where balances drop due to market losses or collapse of investments, or where a temporary spike near year‑end can penalise a member twice (in the year of the spike and the following year). It recommended using a fixed test time instead (pp. 3-4).
The IFPA said that ‘only [the] closing total superannuation balance (TSB) should be used for Division 296 purposes. The “higher of two balances” approach produces unfair outcomes by taxing notional balances rather than actual circumstance and must be adjusted to account for losses, insurance proceeds, excess contributions and other events outside a member’s control.’ (p. 1)
Definition of TSB and TSB value
According to the EM (paragraph 1.47), all Australian superannuation interests are counted in an individual’s TSB. Each superannuation interest has a TSB value and an individual’s TSB is the sum of the TSB values of each of their superannuation interests.
TSB value is defined in proposed section 307-230A (inserted by item 6 of Schedule 2 to the Bill) as being determined either by a method or value prescribed in regulations or, if there is no prescribed method or value, by using what is colloquially known as the ‘withdrawal benefit’ for the interest (which is not applicable to defined benefit interests). This is the total amount of superannuation benefits that would become payable if the individual had the right to cause the interest to cease at that time and had caused the interest to cease at that time.
Proposed subsection 307-230A(2) sets out several matters that the regulations may take into account in specifying a value or method. Under proposed paragraph 307-230A(2)(c), this extends to a defined benefit interest. Proposed subsection 307-203A(3) allows the relevant Minister to approve a legislative instrument for the methods or factors used to determine the TSB value.
Liability for the tax
As set out above, item 14 of Schedule 1 inserts proposed Division 296 into the ITAA 1997. Within new Division 296, proposed sections 296-20 to 296-25 create exceptions to liability for child recipients and persons who receive structured settlement contributions. Otherwise, an individual will be liable to pay the tax if they have taxable superannuation earnings.
In relation to structured settlements, the SMSFA said ‘there is no similar concession for individuals who have received TPD [Total and Permanent Disability] insurance proceeds via superannuation. … It is our view that either, impacted individuals be excluded from Division 296 altogether, or that an adjustment be made to their TSB value to reflect the amount of insurance proceeds received.’ (p. 3)
The SMSFA also argued that: ‘Similar situations can also arise following the death of an insured member in the fund. That is, the proceeds of a life insurance policy owned by the trustee(s) of the fund, which are allocated to the deceased member’s account, can often result in a large increase in the deceased member’s balance. … To avoid these unintended situations from arising, a deceased member’s TSB should be adjusted by the amount of life insurance proceeds received.’
The TIA (p. 4) said it agreed with the structured settlement proposal but considered that it should be extended to recipients of TPD and terminal illness benefits.
To determine whether a person has taxable superannuation earnings as set out in proposed section 296-40, it is first necessary to subtract the LSBT from the individual’s TSB reference amount, divide by the TSB reference amount and multiply by 100. For example, if a person has a TSB reference amount of $5 million at the end of a relevant income year and their total superannuation earnings for that year are $50,000, the proportion of their TSB above the threshold would be 40% (($5 million - $3 million)/$5 million).
This percentage is then multiplied by the amount of superannuation earnings for the income year to provide the amount of taxable superannuation earnings. In the example above, the person’s taxable earnings for Division 296 purposes would be $20,000 (40% of $50,000). This amount would be taxable at 15% and the person would have a Division 296 tax liability of $3,000 for the year.
If an individual’s TSB is greater than the very large superannuation balance threshold (VLSBT) of $10 million (proposed section 296-35) they will also have a very large superannuation balance earnings component. Under proposed section 296-45, to work out the total amount of this component for an income year, subtracting the VLSBT from the individual’s TSB reference amount, divide by the TSB reference amount and multiply by 100. For example, if a person has a TSB reference amount of $12 million at the end of a relevant income year and their total superannuation earnings for that year are $100,000, the proportion of their TSB above the LSBT would be 75% (($12 million - $3 million)/$12 million). The proportion of their TSB above the VLSBT would be 16.67% (($12 million - $10 million)/$12 million).
The person’s Division 296 tax would comprise 2 parts:
for the proportion above the LSBT, the person would have taxable superannuation earnings of $75,000 (75% of $100,000)
for the proportion above the VLSBT, the person would have taxable superannuation earnings of $16,667 (16.67% of $100,000).
The amount of $75,000 relating to the proportion above the LSBT will be taxed at 15%, resulting in tax of $11,250. The amount of $16,667 relating to the proportion above the VLSBT will be taxed at an additional 10%, resulting in tax of $1,666.67. The person’s total Division 296 tax liability for the year would be $12,917.
For the purposes of proposed sections 296-40 and 296-45, a person’s TSB is taken to be nil after death: proposed section 296-50.
Calculating total superannuation earnings
The amount of a person’s total superannuation earnings for an income year is generally the total of the person’s relevant superannuation earnings for each of the person’s superannuation interest and each superannuation interest that supports an income stream: proposed subsection 296-55(1). Daniel Butler of DBA Lawyers has noted: ‘an SMSF member may have an interest in a large APRA fund, a retirement savings account and an SMSF, and the attributable earnings for that member from each fund need to be aggregated by the ATO and a Div 296 assessment issued.’
Calculating Division 296 fund earnings
Daniel Butler has noted that Div 296 earnings are broadly calculated as follows:
start with the amount of the fund’s relevant taxable income for the income year (or loss)
deduct assessable contributions
add back net exempt current pension income (ECPI) (broadly, exempt pension income less deductions under section 8-1 of the ITAA 1997 and
deduct any non-arm’s length income.
Franking credits and foreign income tax offsets
Paragraph 1.66 of the EM refers to the fund’s relevant taxable income as including grossed-up franking credits and foreign income tax offsets. Paragraphs 1.67 and 1.69 to 1.70 explain:
… Including the grossed-up amount in Division 296 ensures the gross company profit is subject to the new headline tax rate for superannuation earnings. The superannuation fund receives the full benefit of the franking credit offset, fully refunding the tax paid by the company to prevent any double taxation…
Including the foreign income upon which foreign tax has been paid also reflects the intended operation of Australia’s double tax agreements, which aim to reduce double taxation by fully or partially reducing the tax paid in Australia on foreign income with the foreign income tax offset. Including the gross amount of foreign income in Division 296 fund earnings is necessary to ensure that earnings from foreign income sources are subject to the appropriate headline tax rate for superannuation earnings…
Foreign tax offsets do not reduce Division 296 fund earnings as these do not form part of the income that a superannuation fund’s concessional tax rates are applied to - consistent with the general foreign tax offset rules, the offsets are only available to be used by the legal entity that owns the relevant income.
The SMSFA submission on the exposure draft of the Bill notes the intention of the policy is to tax earnings above $3 million at an additional 15% and earnings above $10 million at an additional 25% (p. 5). It argues:
However, including the grossed-up amount of dividends received (i.e. the dividend received plus the franking credit) and foreign tax offsets as earnings inflates the true value of “actual” earnings and results in effective tax rates which, we feel, exceed those intended under this measure.
This outcome is particularly acute for pension funds which receive foreign income tax offsets as these funds do not receive the benefit of these offsets for ordinary income tax purposes.
CPA Australia, CA ANZ, Institute of Public Accountants (the joint bodies) stated (p. 3):
This is an unfair outcome which ignores the purpose of franking credits. The purpose of such credits is to adjust the tax rate applying to dividends and other distributions (for example from trust or managed investment scheme distributions) to the tax rate applying to the relevant taxpayer.
Not all commentators were convinced that there was a flaw in the Bill regarding franking credits. According to Accounting Times:
Simon Gow, Grant Thornton’s national head of self-managed superannuation, said the draft Div 296 bill correctly based the tax on individuals’ “grossed-up dividends” rather than cash earnings, consistent with other parts of the tax system.
“It is standard in Australian tax for grossed‐up dividends to form part of the taxable base regardless of whether the taxpayer receives the full credit as a refund,” Gow told Accounting Times.
“Individuals, SMSFs, and companies are all taxed on the grossed‐up dividend, not the cash component, even though some may not get the entire credit back.” …
“Because full franking credits continue to be available at the fund level, only the marginal additional tax is payable, and no tax‐on‐tax or double‐taxation outcome arises.”
The TIA stated (p. 6):
We consider that the relevant income for Division 296 should not be grossed up for foreign income tax offsets that are disallowed in the superannuation fund under the [foreign income tax offsets] cap, as this could result in double taxation for the individual under Division 296 and potentially violate double tax treaty obligations. This issue should be clarified. Further, we are of the view that a credit should be allowed against Division 296 tax on relevant income that is ECPI [exempt current pension income] for which foreign tax has been paid by the fund, to prevent further instances of double taxation.
Requirement for SMSF actuarial certificate
For large APRA-regulated funds, taxable superannuation earnings (TSE) would be attributed on a ‘fair and reasonable’ basis, with ‘fair and reasonable’ to be defined in regulations (proposed section 296-35(3) of the ITAA 1997).
For self-managed super funds (SMSFs), it is envisaged the regulations would require the SMSF to present an actuarial certificate every income year confirming the attributable TSE for each in-scope member based on a proportionate approach, in a similar manner to how exempt current pension income (ECPI) is currently calculated (p. 26).
The SMSFA argued the requirement should not apply to single‑member funds as ‘the risk of selectively attributing specific fund assets to in-scope members in the fund does not exist’. (p. 6). The joint bodies (p. 2) agreed with this view. The SMSFA also claimed (p. 7) that the attribution methodology to be used by small funds, which would be based on the member’s time-weighted share of the fund over the relevant income year, would give rise on occasions to unfair outcomes, for example when a member joins part way through the year.
TSB measured only at 30 June 2027 for 2026-27
Schedule 1, item 24, proposed subsection 296‑1(2) of the Income Tax (Transitional Provisions) Act 1997 (ITTP Act) introduces a transitional rule for the 2026-27 income year.
The EM states at paragraph 1.219:
Transitional arrangements apply for the first year of the Division 296 tax. For the 2026‑27 income year, whether Division 296 tax is payable, and the amount of that tax payable, is determined solely by reference to the TSB at the end of that income year.
This means that members can reduce their balances before 30 June 2027 and avoid being captured. After the transitional year, if the starting balance exceeds the relevant threshold, a subsequent withdrawal will not assist.
One‑off CGT cost base reset (optional election)
Under Schedule 1, item 24, proposed sections 296‑50 and 296‑55 of the ITTP Act, small superannuation funds can elect to reset the cost base of assets to their 30 June 2026 market value for Division 296 purposes only. The election is voluntary (i.e. it must be actively chosen) and it applies to all assets (not asset‑by‑asset). The election is irrevocable and must be made by the small superannuation fund’s 2026-27 tax return due date.
Several submissions criticised the requirement that the cost‑base reset must be applied to all assets, rather than allowing trustees to elect the reset asset‑by‑asset. For example, the SMSFA stated (p. 8):
Requiring that the fund trustee’s cost base adjustment choice be applied to all CGT assets held by the trustee will result in unfair outcomes where a particular fund asset’s market value at 30 June 2026 is less than its cost base ….
In our view, to improve the fairness of these CGT adjustment provisions, the proposed cost base adjustment method for small superannuation funds should provide that the cost base (for Division 296 purposes) be adjusted, at 30 June 2026, to the greater of:
The asset’s market value at 30 June 2026, or
The asset’s CGT cost base.
IFPA argued (p. 5) the proposed rule was unfair, and that trustees should be allowed to choose which assets to reset, similar to the 2017 transfer balance cap transitional rules (p. 2), or alternatively allow a rule where the reset value is the greater of cost base or market value to avoid penalising members. The joint bodies (p. 5) supported an asset-by-asset approach.
The TIA pointed to the disparity in treatment of APRA funds and SMSFs. It said (p. 8):
SMSFs can opt in to adjust the cost base of all fund assets to their market value as at 30 June 2026 (cost base adjustment method), while large APRA funds are required to adjust their actual realised capital gains for the first four years (factor method). All funds should have the option to choose either approach to prevent potential detriment to members, particularly affecting wrap-style superannuation funds that manage specific assets with unique cost bases for each account, although this issue extends to master funds as well.
Deceased members
Under Schedule 1, item 24, proposed subsection 296-1(3) of the ITTP Act:
You are not liable to pay Division 296 tax for the 2026-27 income year if you die on or before the last day of the year.
This approach does not apply for subsequent financial years.
Several stakeholders, including the IFPA and the SMSFA, indicated that Div 296 could operate like a ‘death tax’ and that its provisions were unworkable and inequitable. The IFPA said (p. 4):
The former proposed legislation excluded members from Division 296 in the year they died (unless they died on 30 June). This was a sensible approach that should be retained. We note the current draft contains this approach only for the 2026-27 year.
In practice, Division 296 assessments may be issued many months after death, often after probate has been granted and estate assets have already been distributed. Executors may therefore be faced with a tax liability at a point in time when they have no remaining assets under their control. …
Further inequity could arise where an executor receives the Division 296 tax liability in the situation where the death benefits are not paid to the estate but rather to a non-beneficiary of the estate. For example, Person A dies leaving all his superannuation to second spouse B. A’s estate goes to his two children from his first marriage - C and D. In this example, the Division 296 tax liability will be borne by C and D, even though the superannuation death benefits went to B. This is obviously an inequitable result.
Further complexity arises where death benefits are paid partly as a pension to a surviving spouse and partly as a lump sum, including to other beneficiaries. This could result in individuals who have never previously been subject to Division 296, such as surviving spouses whose balances exceed $3 million for the first time, being unexpectedly brought within the tax net as a direct consequence of death. Death is also a point at which significant capital gains are often realised, potentially inflating Division 296 “earnings” in the final year and exacerbating the unfairness of the outcome.
The TIA said (p. 5):
In essence, we consider that a deceased estate should not incur Division 296 tax unless the payment due date occurred prior to death, as the deceased individual can no longer benefit from their superannuation account and should therefore not be subject to taxation. Typically, the account balance would be distributed among the death benefit dependents, who we consider should be granted a 12-month period to address any excess above the $3 million or $10 million cap, similar to the allowances for TBC excess under Table item 2, subsection 294-25 (1) of the ITAA 1997.
Daniel Butler was quoted as saying:
…. the change will have the effect of accelerating the time that Div 296 tax will be paid by a surviving spouse given the surviving spouse will be tested based on the higher of the start or the end of the financial year…
“For example, if dad dies on 1 January 2028 (after the transitional year of 2026/27) with an automatically reversionary pension in favour of mum and each have $2 million in super, mum will be assessed to Div 296 tax in respect of the 2027/28 financial year given she will have more than $3 million at the end of that financial year provided she also derives some superannuation earnings in respect of her interests which includes the reversionary pension transferring to her upon dad’s death,” he said. ..
Moreover, he said, [Schedule 1, item 14, proposed paragraph 296-55(1)(b) of the ITAA 1997] of the new draft legislation also confirms the fact that a person’s total superannuation earnings includes earnings in relation to an automatically reversionary pension.
A commentator, Alvia CIO Josh Derrington, has said the proposed changes to Division 296 can feel like ‘a stealthy inheritance tax’ once capital gains, death benefits and balance thresholds interact.
Mr Derrington is quoted in an article in the Australian Financial Review on 12 February 2026. The article asserted that the new tax is ‘making the cost of dying with money in super excruciatingly expensive if you’ve got no surviving spouse, and it’s even making it expensive if you’ve got a surviving spouse’. This is:
Because when somebody dies, their super fund (especially a self-managed super fund) typically has to sell assets such as property or shares to pay out the death benefit to beneficiaries. Under current rules, that sale triggers 10 per cent capital gains tax within the fund.
But under Division 296, if a member of a fund has more than $3 million in super, a tax of as much as 30 per cent will apply over that threshold. If the balance exceeds $10 million, the tax could be as high as 40 per cent.
Moreover, consider a couple who had $2.5 million each in super. Neither is anywhere near being individually liable for the new tax. Before the new tax, if the wife died and her $2.5 million pension went to her husband (who also had $2.5 million), he would have had a $5 million mostly tax-free pension for a time (at least some of this money would need to go back into an accumulation account after 12 months).
But that changes dramatically under Division 296.
Suddenly, he is liable for an extra tax on all future earnings and asset sales on the proportion of his balance above $3 million.
Excluded superannuation earnings
Schedule 1, item 14 inserts subsections 296-55(2) and (3) into the ITAA 1997 under which certain earnings are excluded from taxable superannuation earnings and are known as Division 296 excluded interests. These relate to State higher level office holders and Commonwealth justices and judges.
Under two High Court rulings, Austin v Commonwealth (2003) 215 CLR 185 and Clarke v Federal Commissioner of Taxation (2009) 240 CLR 272, the Commonwealth cannot impose tax on an interest in a ‘constitutionally protected fund’. These are funds which hold superannuation contributions on behalf of State government high-level office holders.
The Commonwealth is also unable to impose tax in respect of an interest in a superannuation fund established under the Judges' Pensions Act 1968. This is by virtue of section 72(iii) of the Constitution.
Proposed subsection 296-55(3), table items 3 and 4 provide that earnings from the interests of ACT and NT Supreme Court judges are also excluded.
Also, table item 6 in proposed subsection 296-55(3) an interest in a non-complying superannuation fund is not subject to Division 296 tax. This is because such funds are already taxed at the highest marginal rate and do not receive earnings tax concessions.
Such interests will still need to be counted as part of the person’s TSB. This is to ensure that earnings on any other superannuation interest that the person holds outside of their excluded fund is within the scope of the tax: EM, paragraphs 1.126 and 1.136.
Imposition Bill
Under clauses 4 and 5, the Imposition Bill imposes the additional tax of 15% on superannuation earnings that correspond to the percentage of a person’s total superannuation balance that exceeds the large superannuation balance threshold for a year of income, and 25% on that portion that exceeds the very large superannuation balance threshold.
Clause 6 is a severability provision. This is required so that the tax does not apply if its imposition on a person exceeds the legislative power of the Commonwealth.
Changes to the LISTO
According to ASFA:
LISTO is a government payment into eligible members’ super accounts that offsets the 15 per cent tax on contributions to super. It is designed to ensure people in the lowest income tax brackets still receive a genuine tax concession on super, rather than paying a similar or higher rate of tax on super contributions than on their wages.
Currently, to be eligible for LISTO, an individual must have an adjusted taxable income (ATI) of $37,000 or less. There is also a maximum LISTO amount of $500 for an income year. Paragraph 2.3 of the EM explains:
Over recent years, LISTO settings have remained the same while other aspects of the tax and superannuation system have changed. This means that some low income earners receive little or no concessional treatment on their superannuation contributions.
In short, the amendments would increase the upper income threshold for the LISTO and raise the maximum refundable offset. The changes would take effect from 1 July 2027.
Paragraph 12C(1)(b) and subparagraph 12C(2)(c)(i) of the Superannuation (Government Co-contribution for Low Income Earners) Act 2003 (the Co-contribution Act) refer to the current eligibility threshold for the LISTO as $37,000. Item 1 of Schedule 4 to the Bill amends these provisions so that rather than referring to a specific figure, the provisions will refer to the lowest income tax threshold (after the tax free threshold) as set out in Part I of Schedule 7 to the Income Tax Rates Act 1986. This means that, in 2027-28, any person with an ATI not exceeding $45,000 (and who meets the other LISTO criteria) will be eligible for the LISTO.
Also under Schedule 4, items 2 and 3 would amend paragraph 12E(2)(b) and insert proposed subsection 12E(3A) of the Co-contribution Act to remove the reference to $500 as the maximum LISTO amount and insert a formula to calculate that amount. The calculation would refer to the LISTO eligibility threshold amount, the superannuation guarantee charge percentage, and the standard 15 per cent tax rate for concessional contributions. This means that, for 2027-28, the maximum LISTO amount will be $810.
ASFA supports the proposed change, stating:
Low income earners have long been unfairly disadvantaged by the delayed updates to the thresholds and maximum amount. The announced changes to address this are a positive measure for superannuation fund members (p. 2).
AustralianSuper (p. 4) and Cbus Super (pp. 1-2) also supported the amendments to the LISTO.
Glossary
Abbreviation
Definition
ITAA 1997
Income Tax Assessment Act 1997
LISTO
Low Income Superannuation Tax Offset
LSBT
Large superannuation balance threshold
SMSF
Self-managed super fund
TSB
Total superannuation balance
TSE
Taxable superannuation earnings
VLSBT
Very large superannuation balance threshold
Links
The links to the Bills, the Explanatory Memorandum and second reading speeches can be found on the home pages for the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.
All hyperlinks in this Bills Digest are correct as of February 2026.
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Schedule 2,Definition of total superannuation balance 57
Income Tax Assessment Act 1997 57
Taxation Administration Act 1953 60
Schedule 3,Other amendments relating to superannuation 61
Income Tax Assessment Act 1997 61
Schedule 4,Low income tax offset 63
Superannuation (Government Co‑contribution for Low Income Earners) Act 2003 63
Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026
No. 8, 2026
An Act to amend the law relating to taxation and superannuation, and for related purposes
[Assented to 13 March 2026]
The Parliament of Australia enacts:
1 Short title
This Act is the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026.
2 Commencement
(1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms.
Commencement information
Column 1
Column 2
Column 3
Provisions
Commencement
Date/Details
Sections 1 to 3 and anything in this Act not elsewhere covered by this table
The day this Act receives the Royal Assent.
13 March 2026
Schedule 1
At the same time as the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 commences.
However, the provisions do not commence at all if that Act does not commence.
1 April 2026
Schedules 2 and 3
The first 1 January, 1 April, 1 July or 1 October to occur after the day this Act receives the Royal Assent.
1 April 2026
Schedule 4
1 July 2027.
1 July 2027
Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act.
(2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act.
3 Schedules
Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.
Defence Force Retirement and Death Benefits Act 1973
1 Part VIB (heading)
Repeal the heading, substitute:
Part VIB,Release of benefit to meet deferred Division 293 or 296 tax liability
2 Section 49K
After “item 3”, insert “or 4”.
3 Section 49K (note)
After “Subdivision 133‑C”, insert “or 134‑C”.
4 Paragraph 49M(1)(a)
After “item 3”, insert “or 4”.
5 At the end of section 49N
Add:
(4) If more than one release authority lump sum is paid in relation to release authorities issued to a person, a reference in the formula in subsection (2) to the release authority lump sum is taken to be a reference to the total amount of those release authority lump sums.
Governor‑General Act 1974
6 Subsection 2A(2)
Insert:
Division 293 tax law has the meaning given by the Income Tax Assessment Act 1997.
Division 296 tax law has the meaning given by the Income Tax Assessment Act 1997.
release authority lump sum has the meaning given by subsection 4BA(1).
7 Section 4BA (heading)
Repeal the heading, substitute:
4BA Release of money to meet deferred Division 293 or 296 tax liability
8 Subsection 4BA(1)
After “item 3”, insert “or 4”.
9 Subsection 4BA(1) (note)
After “Subdivision 133‑C”, insert “or 134‑C”.
10 Subsection 4BA(2)
Omit “(within the meaning of the Income Tax Assessment Act 1997) applies”, substitute “and the Division 296 tax law apply”.
11 At the end of section 4BA
Add:
(11) If a release authority lump sum is paid in relation to a release authority issued to a person and an associate deferred allowance is payable to the person, the annual rate of the allowance is to be reduced so that it equals the amount worked out using this formula:
where:
age factor means the age factor for the person on the day on which the allowance becomes payable (see subsection (12)).
pre‑reduction rate means the annual rate of the allowance that would, apart from this section (but having regard to any other provisions of this Act that affect that rate), be payable to the person.
(12) The Finance Secretary may, by legislative instrument, determine the age factor, or the method for working out the age factor, for the purposes of subsection (11).
(13) If more than one release authority lump sum is paid in relation to release authorities issued to a person, a reference in the formula in subsection (7) or (11) to the release authority lump sum is taken to be a reference to the total amount of those release authority lump sums.
Income Tax Assessment Act 1997
12 Section 12‑5 (after section headed “superannuation,deductibility of contributions”)
Insert:
superannuation,Division 296 tax
no deduction for
26‑99A
13 After section 26‑99
Insert:
26‑99A Division 296 tax cannot be deducted
You cannot deduct under this Act any of the following:
(a) an amount of *Division 296 tax that you pay;
(b) an amount of *Division 296 debt account discharge liability that you pay.
296‑D Modifications for temporary residents who depart Australia
296‑E Other provisions
Guide to Division 296
296‑1 What this Division is about
This Division reduces the concessional tax treatment of superannuation earnings for individuals with total superannuation balances that, just before the start of an income year or at the end of the year, are greater than the large superannuation balance threshold for the year.
There are special rules for foreign superannuation funds, constitutionally protected State higher level office holders, certain justices of the Commonwealth, the Australian Capital Territory and the Northern Territory, non‑complying superannuation plans and temporary residents who depart Australia.
Note: Part 3‑20 in Schedule 1 to the Taxation Administration Act 1953 contains rules about the administration of the Division 296 tax.
Subdivision 296‑A,Object of this Division
Table of sections
Operative provisions
296‑5 Object of this Division
Operative provisions
296‑5 Object of this Division
The object of this Division is to reduce the concessional tax treatment of superannuation earnings for individuals with *total superannuation balances that, just before the start of an income year or at the end of the year, are greater than the *large superannuation balance threshold for the year.
Subject to certain exceptions, a tax is payable on a proportion of your earnings in relation to superannuation interests if your total superannuation balance just before the start of the year or at the end of the year exceeds the large superannuation balance threshold for the year. A higher amount of tax is payable to the extent that the total superannuation balance exceeds the very large superannuation balance threshold for the year.
Table of sections
Liability for tax
296‑15 Liability for tax
296‑20 Exception,child recipients of superannuation income streams
Large superannuation balance threshold and very large superannuation balance threshold
296‑30 Large superannuation balance threshold
296‑35 Very large superannuation balance threshold
Taxable superannuation earnings and related concepts
296‑40 Your taxable superannuation earnings
296‑45 Your very large superannuation balance earnings component
296‑50 Total superannuation balance taken to be nil after death
296‑55 Your total superannuation earnings
296‑60 Division 296 fund earnings
296‑65 Your relevant superannuation earnings for a superannuation interest,general rule
296‑70 Your relevant superannuation earnings for a superannuation interest,certain defined benefit and other interests
296‑75 Modifications
Liability for tax
296‑15 Liability for tax
Subject to sections 296‑20 and 296‑25, you are liable to pay *Division 296 tax for an income year if you have *taxable superannuation earnings for the year.
Note: The amount of the tax is set out in the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026.
296‑20 Exception,child recipients of superannuation income streams
You are not liable to pay *Division 296 tax for an income year if you are a *child recipient of a *superannuation income stream at any time in the year.
You are not liable to pay *Division 296 tax for an income year if a *structured settlement contribution is made in respect of you in that year or in any earlier income year.
Large superannuation balance threshold and very large superannuation balance threshold
296‑30 Large superannuation balance threshold
The large superannuation balance threshold is:
(a) for the 2026‑27 income year,$3,000,000; or
(b) for the 2027‑28 income year or a later income year,the amount worked out by indexing annually the amount mentioned in paragraph (a).
Note: Subdivision 960‑M shows how to index amounts. However, annual indexation does not necessarily increase the amount of the threshold: see section 960‑285.
296‑35 Very large superannuation balance threshold
The very large superannuation balance threshold is:
(a) for the 2026‑27 income year,$10,000,000; or
(b) for the 2027‑28 income year or a later income year,the amount worked out by indexing annually the amount mentioned in paragraph (a).
Note: Subdivision 960‑M shows how to index amounts. However, annual indexation does not necessarily increase the amount of the threshold: see section 960‑285.
Taxable superannuation earnings and related concepts
296‑40 Your taxable superannuation earnings
(1) You have taxable superannuation earnings for an income year of the amount worked out using the following formula if:
(a) your *total superannuation balance just before the start of the year, or at the end of the year, is greater than the *large superannuation balance threshold for the year; and
(b) the amount of your *total superannuation earnings for the year is greater than nil:
(2) For the purposes of the formula in subsection (1), the percentage is the amount (expressed as a percentage) worked out using the following formula:
where:
your total superannuation balance reference amount is the greater of:
(a) your *total superannuation balance (if any) just before the start of the year; and
(b) your total superannuation balance (if any) at the end of the year.
(3) The result of the formula in subsection (2) must be rounded to 2 decimal places (rounding up if the third decimal place is 5 or more).
296‑45 Your very large superannuation balance earnings component
(1) You have a very large superannuation balance earnings component for an income year of the amount worked out using the following formula if your *total superannuation balance just before the start of the year, or at the end of the year, is greater than the *very large superannuation balance threshold for the year:
(2) For the purposes of the formula in subsection (1), the percentage is the amount (expressed as a percentage) worked out using the following formula:
where:
your total superannuation balance reference amount is the greater of:
(a) your *total superannuation balance (if any) just before the start of the year; and
(b) your total superannuation balance (if any) at the end of the year.
(3) The result of the formula in subsection (2) must be rounded to 2 decimal places (rounding up if the third decimal place is 5 or more).
296‑50 Total superannuation balance taken to be nil after death
For the purposes of sections 296‑40 and 296‑45, your *total superannuation balance at a particular time is taken to be nil if, as at that time, you have died.
296‑55 Your total superannuation earnings
(1) The amount of your total superannuation earnings for an income year is the total of your *relevant superannuation earnings for the year for:
(a) each *superannuation interest of yours that you have at any time in the year; and
(b) each superannuation interest that supports a *superannuation income stream of which you are a *retirement phase recipient at any time in the year because of the death of another person.
(2) For the purposes of working out that total, the following are taken to be nil:
(a) your *relevant superannuation earnings for a *superannuation interest in a *superannuation plan that is a *foreign superannuation fund for the year;
(b) your relevant superannuation earnings for a superannuation interest that is a *Division 296 excluded interest in relation to the year;
(c) an amount prescribed by the regulations for the purposes of this paragraph.
(3) A *superannuation interest mentioned in paragraph (1)(a) or (b) is a Division 296 excluded interest in relation to the year if:
(a) column 1 of an item of the following table applies to you for the year; and
(b) the interest is specified in column 2 of the item.
Excluded superannuation interests
Item
Column 1
Individual to which item applies for a year
Column 2
Superannuation interest
1
at any time in the year, you are declared by the regulations to be an individual to whom this item applies
a *superannuation interest in a *constitutionally protected fund
2
at any time before or in the year, you were or are:
(a) a Justice of the High Court; or
(b) a justice or judge of a court created by the Parliament
a *superannuation interest in the *superannuation fund established under the Judges’ Pensions Act 1968
3
at any time before or in the year, you were or are the Chief Justice or a Judge of the Supreme Court of the Australian Capital Territory
a *superannuation interest in the *superannuation fund established under the Judges’ Pensions Act 1968, as it applies under the Supreme Court Act 1933 (ACT)
4
at any time before or in the year, you were or are the Chief Justice or a Judge of the Supreme Court of the Northern Territory
a *superannuation interest in the *superannuation fund established under the Supreme Court (Judges Pensions) Act 1980 (NT)
5
both:
(a) at any time in the year, you are a *retirement phase recipient of a *superannuation income stream because of the death of another person; and
(b) item 1, 2, 3 or 4 applies to that other person for the year, or would have applied to that other person for the year but for the person’s death
a *superannuation interest that:
(a) supports the income stream; and
(b) is of a kind specified in column 2 of that item
6
both:
(a) at any time in the year:
(i) you have a *superannuation interest in a *superannuation plan; or
(ii) you are a *retirement phase recipient of a *superannuation income stream, supported by a superannuation interest in a superannuation plan, because of the death of another person; and
(b) the superannuation plan:
(i) is not a *complying superannuation plan for the year; and
(ii) is not a *foreign superannuation fund for the year
the superannuation interest
(4) Nothing in subsection (2) or (3) limits section 6 of the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026.
Note: Section 6 of the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 provides that Division 296 tax is not imposed in relation to a person if the imposition would exceed the legislative power of the Commonwealth.
296‑60 Division 296 fund earnings
Superannuation entities (not including RSA providers or pooled superannuation trusts)
(1) The Division 296 fund earnings for an income year for an entity to which Division 295 (about taxation of superannuation entities) applies is the amount worked out using the following formula:
where:
assessable contributions is the total of the contributions that are included in the entity’s assessable income under Subdivision 295‑C for the year.
net exempt current pension income is the result of:
(a) working out the total amount of the entity’s *exempt income under sections 295‑385 and 295‑390 for the year; and
(b) subtracting the total deductions the entity could make if the exempt income were assessable income, to the extent attributable to the exempt income.
Note 1: Sections 295‑385 and 295‑390 are about income from assets set aside or otherwise used to meet current pension liabilities.
Note 2: Sections 296‑50, 296‑60 and 296‑65 of the Income Tax (Transitional Provisions) Act 1997, which provide for certain adjustments relating to CGT for the purposes of working out Division 296 fund earnings, may be relevant to working out net exempt current pension income under this subsection in some circumstances.
pooled superannuation trust component is the total of any amounts for the year the entity has under subsection (2).
relevant taxable income or loss is:
(a) the entity’s taxable income for the year; or
(b) for an income year that is a *loss year,the amount of the entity’s *tax loss for the year, expressed as a negative amount.
Note 1: Adjustments may apply in relation to the cost base or reduced cost base of a CGT asset that is an asset of a small superannuation fund at the end of 30 June 2026: see section 296‑50 of the Income Tax (Transitional Provisions) Act 1997.
Note 2: Adjustments apply in relation to net capital gains of complying superannuation funds if relevant to working out a person’s relevant superannuation earnings for a superannuation interest for the 2026‑27 income year to the 2029‑30 income year: see section 296‑60 of the Income Tax (Transitional Provisions) Act 1997.
Note 3: Deferred notional gains are disregarded for the purposes of working out the entity’s relevant taxable income or loss under this subsection: see subsection 296‑65(1) of the Income Tax (Transitional Provisions) Act 1997.
Note 4: Certain matters are to be disregarded in working out the entity’s relevant taxable income or loss: see subsection (3) of this section.
(2) For the purposes of the definition of pooled superannuation trust component in subsection (1), the entity has an amount under this subsection equal to the amount worked out using the following formula if it holds any units in a *pooled superannuation trust at any time during the trust’s income year (the relevant year):
(a) that is the same period as the entity’s income year mentioned in subsection (1); or
(b) that, of the trust’s income years, covers the most of the entity’s income year:
where:
entity’s average units is the average number of units in the trust during the relevant year as attributable to the holdings of the entity.
total average units is the average number of units in the trust during the relevant year.
(3) In working out the entity’s relevant taxable income or loss in relation to an income year for the purposes of subsection (1):
(a) disregard paragraph 295‑100(2)(c); and
(b) disregard paragraph 70B(2A)(b) of the Income Tax Assessment Act 1936; and
(c) in determining any *net capital gain or *net capital loss for the year, or any deductions to the extent they are attributable to a net capital gain for the year, disregard the following (except in determining any previously unapplied net capital losses from earlier income years):
(i) section 118‑12 (about assets used to produce exempt income or non‑assessable non‑exempt income) of this Act, to the extent it applies to a *capital gain or *capital loss that a *complying superannuation entity makes from a *segregated current pension asset;
(ii) section 118‑320 (about segregated current pension assets of a complying superannuation entity).
Note 1: Paragraph 295‑100(2)(c) is about deductions for fees and charges for units in a pooled superannuation trust that are segregated current pension assets.
Note 2: Paragraph 70B(2A)(b) of the Income Tax Assessment Act 1936 is about deductions for a loss on the disposal or redemption of certain securities that are segregated current pension assets.
Note 3: The provisions mentioned in paragraph (c) of this subsection still apply for the purposes of working out the entity’s net exempt current pension income under subsection (1) of this section.
Pooled superannuation trusts
(4) Despite subsection (1), the Division 296 fund earnings for an income year for a *pooled superannuation trust is the amount worked out using the following formula:
where:
assessable transferred contributions is the total of the amounts included in the assessable income of the trust under item 1 of the table in section 295‑320 (about certain amounts included in assessable income) for the year.
net exempt current pension income is the result of:
(a) working out the total amount of the trust’s *exempt income under section 295‑400 for the year; and
(b) subtracting the total deductions the entity could make if the exempt income were assessable income, to the extent attributable to the exempt income.
Note 1: Section 295‑400 is about income of a pooled superannuation trust attributable to current pension liabilities.
Note 2: Sections 296‑50, 296‑60 and 296‑65 of the Income Tax (Transitional Provisions) Act 1997, which provide for certain adjustments relating to CGT for the purposes of working out Division 296 fund earnings, may be relevant to working out net exempt current pension income under this subsection in some circumstances.
relevant taxable income or loss is:
(a) the trust’s taxable income for the year; or
(b) for an income year that is a *loss year,the amount of the trust’s *tax loss for the year, expressed as a negative amount.
Note 1: A person will not have relevant superannuation earnings in relation to a pooled superannuation trust. However, Division 296 fund earnings of pooled superannuation trusts are included in the Division 296 fund earnings of certain entities under subsection (1) of this section.
Note 2: Adjustments apply in relation to net capital gains of pooled superannuation trusts if relevant to working out a person’s relevant superannuation earnings for a superannuation interest for the 2026‑27 income year to the 2029‑30 income year: see section 296‑60 of the Income Tax (Transitional Provisions) Act 1997.
Note 3: Deferred notional gains are disregarded for the purposes of working out the trust’s relevant taxable income or loss under this subsection: see subsection 296‑65(2) of the Income Tax (Transitional Provisions) Act 1997.
RSA providers that are not life insurance companies
(5) Despite subsection (1) of this section, the Division 296 fund earnings for an income year for an *RSA provider that is not a *life insurance company is the amount worked out using the following formula:
where:
assessable contributions is the total of the contributions that are included in the *RSA provider’s assessable income under Subdivision 295‑C for the year.
relevant exempt income is the total amount of the *RSA provider’s *exempt income under items 2 and 3 of the table in section 295‑405 (about other exempt income) for the year.
RSA providers that are life insurance companies
(6) The Division 296 fund earnings for an income year for an *RSA provider that is a *life insurance company is the amount worked out using the following formula:
where:
relevant annuity income is the total of the amounts of the *RSA provider’s assessable income mentioned in paragraphs 320‑137(3)(d) and (e) (about amounts credited to *RSAs from which *annuities are paid) for the year.
relevant taxable income is the total of the amounts included in the assessable income of the *RSA provider under paragraph 320‑137(2)(f) (about amounts credited and debited to *RSAs) for the year.
Other matters
(7) The Division 296 fund earnings for an income year for an entity is nil if, apart from this subsection, it would be negative.
296‑65 Your relevant superannuation earnings for a superannuation interest,general rule
(1) Your relevant superannuation earnings for an income year (your year) for a *superannuation interest is the amount attributable to the interest under this section, of the *Division 296 fund earnings for:
(a) the entity that is:
(i) for an interest in a *superannuation fund,the superannuation fund; or
(ii) for an interest in an *approved deposit fund,the approved deposit fund; or
(iii) for an *RSA,the *RSA provider; and
(b) the income year of that entity that is the same period as your year (or that, of the income years of the entity, covers the most of your year).
(2) Subsection (1) does not apply in relation to:
(a) a *superannuation interest that, at any time in your year:
(i) is or includes a *defined benefit interest; and
(ii) is not in the *retirement phase; or
(b) a superannuation interest that is prescribed by the regulations for the purposes of this paragraph.
Note: See section 296‑70 in relation to superannuation interests mentioned in paragraphs (a) and (b) of this subsection.
General attribution requirement
(3) The amount attributable to the *superannuation interest must be determined on a fair and reasonable basis, having regard to the matters prescribed by the regulations for the purposes of this subsection.
Specific requirements for interests in small superannuation funds and prescribed interests
(4) Subsection (3) does not apply if the *superannuation interest is:
(a) a superannuation interest in a *small superannuation fund; or
(b) a superannuation interest prescribed by the regulations for the purposes of this paragraph.
(5) The amount attributable to such a *superannuation interest must instead be determined in accordance with the regulations.
(6) Regulations made for the purposes of subsection (5):
(a) may provide for the amount attributable to the interest to be determined wholly or partly by reference to an *actuary’s certificate; and
(b) may specify circumstances in which a nil amount is attributable to the interest.
296‑70 Your relevant superannuation earnings for a superannuation interest,certain defined benefit and other interests
(1) Your relevant superannuation earnings for an income year for a *superannuation interest mentioned in subsection 296‑65(2) is the amount worked out using the following formula:
where:
prescribed factor is the value prescribed by the regulations for the purposes of this definition.
your contributions total is the amount (which may be a nil amount) determined in accordance with regulations made for the purposes of this definition.
your withdrawals total is the amount (which may be a nil amount) determined in accordance with regulations made for the purposes of this definition.
(2) For the purposes of subsection (1), if the interest does not exist at the end of the year, or just before the start of the year, the *total superannuation balance value of the interest at that time is taken to be nil.
296‑75 Modifications
(1) Section 296‑65 or 296‑70 has effect in relation to an individual subject to any modifications prescribed by the regulations for the purposes of this subsection.
(2) Without limiting subsection (1), regulations made for the purposes of that subsection may modify section 296‑65 or 296‑70 in relation to an individual in different ways depending on any of the following matters:
(a) the individual to whom the modification relates;
(b) whether a *superannuation interest of the individual is in the *retirement phase;
(c) whether a superannuation interest of the individual is or includes a *defined benefit interest;
(d) a *superannuation income stream (if any) of which the individual is a *retirement phase recipient;
(e) the rules of a *superannuation fund or *approved deposit fund, or the terms and conditions of an *RSA, of which the individual is a member;
(f) the *superannuation provider in relation to a *superannuation plan of which the individual is a member;
(g) whether a superannuation interest of the individual is subject to a *payment split;
(h) whether the individual is treated as having a superannuation interest under subsection 307‑230(3);
(i) whether the individual dies during an income year;
(j) any other matter.
(3) Without limiting subsection (1), in modifying section 296‑65 or 296‑70 in relation to an individual’s *relevant superannuation earnings for an income year, the regulations may deal with income or other amounts relating to that income year or to any earlier or later period.
Subdivision 296‑C,When tax is payable
Guide to Subdivision 296‑C
296‑125 What this Subdivision is about
This Subdivision has rules about payment of Division 296 tax.
Table of sections
Operative provisions
296‑130 When tax is payable,original assessments
296‑135 When tax is payable,amended assessments
296‑140 General interest charge
Operative provisions
296‑130 When tax is payable,original assessments
(1) Your *assessed Division 296 tax for an income year is due and payable at the end of 84 days after the Commissioner gives you notice of the assessment of the amount of the *Division 296 tax.
Exception for tax deferred to a Division 296 debt account
(2) However, subsection (1) does not apply to an amount of *assessed Division 296 tax that is *deferred to a Division 296 debt account for a *superannuation interest.
Note 1: For assessments of Division 296 tax, see Division 155 in Schedule 1 to the Taxation Administration Act 1953.
Note 2: For deferred to a Division 296 debt account, see Division 134 in that Schedule.
Note 3: For release of money from a superannuation plan to pay these amounts, see Division 131 in that Schedule.
296‑135 When tax is payable,amended assessments
(1) If the Commissioner amends your assessment, any extra *assessed Division 296 tax resulting from the amendment is due and payable 84 days after the day the Commissioner gives you notice of the amended assessment.
Exception for tax deferred to a Division 296 debt account
(2) However, subsection (1) does not apply to an amount of extra *assessed Division 296 tax that is *deferred to a Division 296 debt account for a *superannuation interest.
Note 1: For deferred to a Division 296 debt account, see Division 134 in Schedule 1 to the Taxation Administration Act 1953.
Note 2: For release of money from a superannuation plan to pay these amounts, see Division 131 in that Schedule.
296‑140 General interest charge
If an amount of *assessed Division 296 tax or *shortfall interest charge on assessed Division 296 tax that you are liable to pay remains unpaid after the time by which it is due to be paid, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
(a) begins on the day on which the amount was due to be paid; and
(b) ends on the last day on which, at the end of the day, any of the following remains unpaid:
(i) the assessed Division 296 tax or the shortfall interest charge;
(ii) general interest charge on any of the assessed Division 296 tax or the shortfall interest charge.
Note 1: The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953. For the rate of general interest charge payable under this section, see subsection 8AAC(2A) of that Act.
Note 2: Shortfall interest charge is worked out under Division 280 in Schedule 1 to that Act.
Note 3: See section 5‑10 of this Act for when the amount of shortfall interest charge becomes due and payable.
Subdivision 296‑E,Modifications for temporary residents who depart Australia
Guide to Subdivision 296‑E
296‑190 What this Subdivision is about
If you receive a departing Australia superannuation payment, you are entitled to a refund of any Division 296 tax you have paid.
Table of sections
Operative provisions
296‑195 Who is entitled to a refund
296‑200 Amount of the refund
296‑205 Entitlement to refund stops all Division 296 tax liabilities
Operative provisions
296‑195 Who is entitled to a refund
You are entitled to a refund if:
(a) you have made payments of any of the following:
(i) *assessed Division 296 tax;
(ii) a voluntary payment made under section 134‑70 in Schedule 1 to the Taxation Administration Act 1953 for the purpose of reducing the amount by which a *Division 296 debt account for a *superannuation interest is in debit;
(iii) *Division 296 debt account discharge liability; and
(b) you receive a *departing Australia superannuation payment; and
(c) you apply to the Commissioner in the *approved form for the refund.
Note: How the refund is applied is set out in Part IIB of the Taxation Administration Act 1953.
296‑200 Amount of the refund
(1) The amount of the refund to which you are entitled is the sum of the payments mentioned in paragraph 296‑195(a) that you have made.
(2) However, the amount of the refund is reduced by the amount of any refunds to which you are entitled under a previous application of this Subdivision.
Exception,Division 296 tax attributable to period when you are an Australian resident
(3) Despite subsection (1), if:
(a) at any time in your 2026‑27 income year, or a later income year, you are an Australian resident (but not a *temporary resident); and
(b) a payment mentioned in paragraph 296‑195(a) that you have made relates, or is reasonably attributable, to that income year;
the payment is to be disregarded in working out under subsection (1) of this section the amount of the refund to which you are entitled.
296‑205 Entitlement to refund stops all Division 296 tax liabilities
(1) The Commissioner may decide to release you from any existing or future liability to pay *Division 296 tax or *Division 296 debt account discharge liability if:
(a) you become entitled to a refund under section 296‑195; or
(b) you would become entitled to such a refund, if you were to pay the liability and paragraph 296‑195(c) were disregarded.
(2) The Commissioner may take such action as is necessary to give effect to a decision under subsection (1).
Subdivision 296‑G,Other provisions
Guide to Subdivision 296‑G
296‑255 What this Subdivision is about
Disregard LRBA amounts in working out your total superannuation balance for the purposes of this Division.
This Division has effect despite subsection 73(3A) of the Australian Capital Territory (Self‑Government) Act 1988.
Table of sections
Operative provisions
296‑260 Disregard LRBA amounts in working out total superannuation balance
296‑265 Interaction with the Australian Capital Territory (Self‑Government) Act 1988
Operative provisions
296‑260 Disregard LRBA amounts in working out total superannuation balance
For the purposes of this Division, disregard paragraph 307‑230(1)(d).
Note: If you have an LRBA amount under section 307‑231 (about limited recourse borrowing arrangements), paragraph 307‑230(1)(d) includes the amount in your total superannuation balance.
296‑265 Interaction with the Australian Capital Territory (Self‑Government) Act 1988
This Division has effect despite subsection 73(3A) of the Australian Capital Territory (Self‑Government) Act 1988.
Note: That subsection relates to the remuneration of judges and magistrates of the Australian Capital Territory.
15 Section 303‑20 (heading)
Repeal the heading, substitute:
303‑20 Payments from release authorities,paying debt account discharge liability or Division 296 debt account discharge liability
16 Section 304‑20 (heading)
Repeal the heading, substitute:
304‑20 Excess payments from release authorities,paying debt account discharge liability or Division 296 debt account discharge liability
17 Section 960‑265 (after table item 10A)
Insert:
10B
*Large superannuation balance threshold
section 296‑30
10C
*Very large superannuation balance threshold
section 296‑35
18 Paragraph 960‑285(3)(a)
After “paragraph (b)”, insert “or (c)”.
19 At the end of subsection 960‑285(3)
Add:
; or (c) if the amount is mentioned in item 10B or 10C in section 960‑265,the amount for the 2026‑27 income year.
20 Subsection 960‑285(5) (paragraph (a) of the definition of base quarter)
After “paragraph (b)”, insert “or (c)”.
21 Subsection 960‑285(5) (at the end of the definition of base quarter)
Add:
; or (c) if the amount is mentioned in item 10B or 10C in section 960‑265,the quarter ending on 31 December 2025.
22 Subsection 960‑285(7) (at the end of the table)
Add:
4
Item 10B (large superannuation balance threshold)
the *index number mentioned in subsection 960‑280(1) (which is about the CPI)
$150,000
5
Item 10C (very large superannuation balance threshold)
the *index number mentioned in subsection 960‑280(1) (which is about the CPI)
$500,000
23 Subsection 995‑1(1)
Insert:
assessed Division 296 tax means *Division 296 tax, as assessed under Schedule 1 to the Taxation Administration Act 1953.
deferred to a Division 296 debt account, for a *superannuation interest, in relation to *assessed Division 296 tax, has the meaning given by section 134‑10 in Schedule 1 to the Taxation Administration Act 1953.
Division 296 debt account has the meaning given by section 134‑60 in Schedule 1 to the Taxation Administration Act 1953.
Division 296 debt account discharge liability has the meaning given by section 134‑120 in Schedule 1 to the Taxation Administration Act 1953.
Division 296 deferral reversal, for a *superannuation interest, has the meaning given by section 134‑20 in Schedule 1 to the Taxation Administration Act 1953.
Division 296 end benefit has the meaning given by section 134‑130 in Schedule 1 to the Taxation Administration Act 1953.
Division 296 excluded interest has the meaning given by subsection 296‑55(3).
Division 296 fund earnings has the meaning given by section 296‑60.
Division 296 tax means tax imposed by the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026.
Division 296 tax law means:
(a) the Income Tax Assessment Act 1997, so far as it relates to the *Division 296 tax; and
(b) any Act that imposes Division 296 tax; and
(c) the Taxation Administration Act 1953, so far as it relates to any Act covered by paragraphs (a) and (b) (or to so much of that Act as is covered); and
(d) any other Act, so far as it relates to any Act covered by paragraphs (a) to (c) (or to so much of that Act as is covered); and
(e) regulations and other legislative instruments under an Act, so far as they relate to any Act covered by paragraphs (a) to (d) (or to so much of that Act as is covered).
large superannuation balance threshold has the meaning given by section 296‑30.
relevant superannuation earnings has the meaning given by sections 296‑65 and 296‑70.
taxable superannuation earnings has the meaning given by section 296‑40.
total superannuation earnings has the meaning given by section 296‑55.
very large superannuation balance earnings component has the meaning given by section 296‑45.
very large superannuation balance threshold has the meaning given by section 296‑35.
Subdivision 296‑A,Application of Division 296 tax rules
Table of sections
296‑1 Application of Division 296 of the Income Tax Assessment Act 1997
296‑1 Application of Division 296 of the Income Tax Assessment Act 1997
(1) Section 296‑15 of the Income Tax Assessment Act 1997 applies to the 2026‑27 income year and later income years.
(2) However, Subdivision 296‑B of the Income Tax Assessment Act 1997 applies in relation to the 2026‑27 income year as if:
(a) the reference in paragraph 296‑40(1)(a) to just before the start of the year were omitted; and
(b) the references to your total superannuation balance reference amount in the formula in subsection 296‑40(2) were references to your total superannuation balance at the end of the year; and
(c) the reference in subsection 296‑45(1) to just before the start of the year were omitted; and
(d) the references to your total superannuation balance reference amount in the formula in subsection 296‑45(2) were references to your total superannuation balance at the end of the year.
Note: The effect of this subsection is that, for the 2026‑27 income year, whether Division 296 tax is payable by you, and the amount of that tax payable, is determined by reference to your total superannuation balance at the end of the year, rather than either just before the start or at the end of the year.
(3) You are not liable to pay Division 296 tax for the 2026‑27 income year if you die on or before the last day of the year.
Subdivision 296‑B,CGT adjustments
Table of sections
296‑50 CGT adjustment for small superannuation funds
296‑55 CGT adjustment for small superannuation funds,requirement to keep records
296‑60 CGT adjustment for complying superannuation funds (other than small superannuation funds)
296‑50 CGT adjustment for small superannuation funds
(1) This section applies if:
(a) a CGT event happens in relation to a CGT asset of a small superannuation fund at a time during an income year; and
(b) the CGT asset is an asset of the fund:
(i) at the end of 30 June 2026; and
(ii) at all times on and from 1 July 2026 to immediately before that CGT event; and
(c) the trustee of the fund has made a choice for the purposes of this paragraph in accordance with subsection (2).
(2) A choice for the purposes of paragraph (1)(c):
(a) is to be in the approved form; and
(b) applies to all CGT assets that are assets of the fund at the end of 30 June 2026; and
(c) can only be made during the period:
(i) starting on the day this section commences; and
(ii) ending on the due day for lodging the fund’s income tax return for the 2026‑27 income year; and
(d) cannot be revoked.
(3) For the purposes of working out the Division 296 fund earnings for the fund for the year under the Income Tax Assessment Act 1997, to the extent it is affected by the cost base or reduced cost base of the CGT asset:
(a) the first element of the cost base or reduced cost base is taken to be the asset’s market value as at the end of 30 June 2026; and
(b) each other element of the cost base or reduced cost base is taken to have been adjusted to nil at the end of 30 June 2026 (such that any amounts that formed part of the cost base or reduced cost base on or before that day are disregarded); and
(c) in relation to the cost base:
(i) there is taken to be no indexation included in any of the elements of the cost base; and
(ii) paragraph 115‑20(1)(a) (about using a cost base that has been calculated without reference to indexation) of that Act is taken to be satisfied (if applicable).
(4) This section does not affect the amount of a net capital loss for any later income year for the purposes of working out Division 296 fund earnings.
296‑55 CGT adjustment for small superannuation funds,requirement to keep records
(1) A trustee of a small superannuation fund who makes a choice for the purposes of paragraph 296‑50(1)(c) must keep the following records:
(a) a record of the choice;
(b) for each CGT asset to which the choice applies,records of each element of its cost base and reduced cost base as affected by subsection 296‑50(3).
(2) The records must be in English, or be readily accessible and convertible into English.
(3) The trustee must retain a record mentioned in subsection (1) until the end of 5 years after it becomes certain that no CGT event (or no further CGT event) can happen such that the record could reasonably be expected to be relevant to working out the fund’s Division 296 fund earnings for an income year.
Note: Section 288‑25 in Schedule 1 to the Taxation Administration Act 1953 imposes an administrative penalty if a trustee does not keep or retain records as required by this section.
296‑60 CGT adjustment for complying superannuation funds (other than small superannuation funds) and pooled superannuation trusts
(1) This section applies for the purposes of working out the Division 296 fund earnings for an income year (the relevant year) under the Income Tax Assessment Act 1997 for a complying superannuation fund or pooled superannuation trust, to the extent it affects a person’s relevant superannuation earnings for a superannuation interest for:
(a) the 2026‑27 income year; or
(b) the 2027‑28 income year; or
(c) the 2028‑29 income year; or
(d) the 2029‑30 income year.
(2) Any net capital gain for the relevant year, that the fund or trust has for the purposes of determining an amount used in working out the Division 296 fund earnings, is taken to be the amount of that gain, apart from this section, multiplied by a factor (which must be less than 1) prescribed by the regulations.
Note 1: The net capital gain that a complying superannuation fund has for purposes of working out the earnings is affected by subsection 296‑60(3) of the Income Tax Assessment Act 1997 (which disregards certain matters).
Note 2: Deferred notional gains are disregarded for the purposes of working out Division 296 fund earnings: see Subdivision 296‑C (about deferred notional gains) of this Act.
(3) This section does not apply in relation to a complying superannuation fund that is a small superannuation fund.
Subdivision 296‑C,Deferred notional gains
Table of sections
296‑65 Deferred notional gains to be disregarded
296‑65 Deferred notional gains to be disregarded
(1) For the purposes of working out an entity’s Division 296 fund earnings for an income year under subsection 296‑60(1) of the Income Tax Assessment Act 1997, disregard any capital gain that, for the purposes of Division 102 of that Act, the entity is treated as having made because of subsection 294‑120(5) of this Act.
Note: Subsection 294‑120(5) deals with deferred notional gains for complying superannuation funds.
(2) For the purposes of working out a pooled superannuation trust’s Division 296 fund earnings for an income year under subsection 296‑60(4) of the Income Tax Assessment Act 1997, disregard any capital gain that, for the purposes of Division 102 of that Act, the trust is treated as having made because of subsection 294‑130(5) of this Act.
Note: Subsection 294‑130(5) deals with deferred notional gains for pooled superannuation trusts.
Judges’ Pensions Act 1968
25 Subsection 4(1)
Insert:
Division 296 tax law has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.
26 Subsection 6(2) (note)
Omit “sustaining the superannuation contribution concession”, substitute “the Division 293 and 296 tax laws”.
27 Part 4 (heading)
Repeal the heading, substitute:
Part 4,Division 293 and 296 tax laws
28 Section 17AK
Omit “applies”, substitute “and Division 296 tax law apply”.
29 Section 17AK (note)
After “Division 293 tax law,”, insert “Division 296 tax law,”.
30 Subsection 17AL(1)
Omit “Judge under item 3”, substitute “Judge or another person under item 3 or 4”.
31 Subsection 17AL(1)
Omit “, either”.
32 Paragraphs 17AL(1)(a) and (b)
Repeal the paragraphs, substitute:
(a) for a Judge:
(i) the Judge’s surcharge debt account is not in debit; or
(ii) subsection (2) applies; or
(b) for another person,the person is entitled to an associate deferred pension.
33 Subsection 17AL(1) (note 1)
Omit “a Judge has under Subdivision 133‑C”, substitute “a Judge or another person has under Subdivision 133‑C or 134‑C”.
34 Subsection 17AL(1) (note 1)
After “Division 293 tax”, insert “or Division 296 tax”.
35 At the end of subsection 17AL(1)
Add:
Note 3: There are special rules in relation to Division 296 tax for Justices of the High Court and justices and judges of a court created by the Parliament (see subsections 296‑55(2) and (3) of the Income Tax Assessment Act 1997).
36 Subsection 17AL(2)
After “This subsection applies”, insert “in relation to a Judge”.
37 Subsection 17AM(1)
Repeal the subsection, substitute:
(1) In addition to any requirements in Division 135 in Schedule 1 to the Taxation Administration Act 1953:
(a) the amount of a release authority lump sum paid in relation to a release authority issued to a Judge must not have the effect that the Judge’s retirement pension is reduced below zero; and
(b) the amount of a release authority lump sum paid in relation to a release authority issued to a person must not have the effect that the person’s associate deferred pension is reduced below zero.
Omit “sections 17AA to 17AJ (which deal with family law splitting)”, substitute “Part 3 (which deals with family law splitting)”.
40 At the end of section 17AM
Add:
(3) For the purpose of subsection (1), the effect of a release authority lump sum on the amount of a person’s associate deferred pension is to be worked out after taking account of any reduction under Part 3 (which deals with family law splitting).
41 Before subsection 17AN(1)
Insert:
Judge’s retirement pension
42 At the end of section 17AN
Add:
Associate deferred pension
(5) If a release authority lump sum is paid in relation to a release authority issued to a person and an associate deferred pension is payable to the person, the annual rate of the pension is to be reduced so that it equals the amount worked out using this formula:
where:
age factor means the age factor for the person on the day on which the pension becomes payable (see subsection (6)).
pre‑reduction rate means the annual rate of the pension that would, apart from this section (but having regard to any other provisions of this Act that affect that rate), be payable to the person.
(6) The regulations may prescribe the age factor, or the method for working out the age factor, for the purposes of subsection (5).
Multiple release authority lump sums
(7) If more than one release authority lump sum is paid in relation to release authorities issued to a Judge or another person, a reference in the formula in subsection (2) or (5) to the release authority lump sum is taken to be a reference to the total amount of those release authority lump sums.
Omit “sustaining the superannuation contribution concession”, substitute “the Division 293 and 296 tax laws”.
44 Part VC (heading)
Repeal the heading, substitute:
Part VC,Division 293 and 296 tax laws
45 Section 22SA
Insert:
Division 296 tax law has the meaning given by subsection 995‑1(1) of the Income Tax Assessment Act 1997.
46 Section 22SB
Omit “applies”, substitute “and Division 296 tax law apply”.
47 Subsection 22SC(1)
After “item 3”, insert “or 4”.
48 Subsection 22SC(1)
Omit “, either”.
49 After paragraph 22SC(1)(b)
Insert:
; or (c) the person is entitled to an associate deferred annuity.
50 Subsection 22SC(1) (note)
After “Subdivision 133‑C”, insert “or 134‑C”.
51 Subsection 22SD(1)
After “retiring allowance”, insert “or associate deferred annuity”.
52 At the end of section 22SD
Add:
(3) For the purpose of subsection (1), the effect of a release authority lump sum on the amount of the person’s associate deferred annuity is to be worked out after taking account of any reduction under Part VAA (which deals with family law splitting).
53 Before subsection 22SE(1)
Insert:
Retiring allowance
54 At the end of section 22SE
Add:
Associate deferred annuity
(5) If a release authority lump sum is paid in relation to a release authority issued to a person and an associate deferred annuity is payable to the person, the annual rate of the annuity is to be reduced so that it equals the amount worked out using this formula:
where:
age factor means the age factor for the person on the day on which the annuity becomes payable (see subsection (6)).
pre‑reduction rate means the annual rate of the annuity that would, apart from this section (but having regard to any other provisions of this Act that affect that rate), be payable to the person.
(6) The Secretary of the Finance Department may, by legislative instrument, determine the age factor, or the method for working out the age factor, for the purposes of subsection (5).
Multiple release authority lump sums
(7) If more than one release authority lump sum is paid in relation to release authorities issued to a person, a reference in the formula in subsection (2) or (5) to the release authority lump sum is taken to be a reference to the total amount of those release authority lump sums.
Superannuation Act 1976
55 Part IXC (heading)
Repeal the heading, substitute:
Part IXC,Release of benefits to meet deferred Division 293 and 296 tax liabilities
56 Subsection 146RB(1)
After “item 3”, insert “or 4”.
57 Subsection 146RB(1) (note)
After “Subdivision 133‑C”, insert “or 134‑C”.
58 Subsection 146RE(2) (definition of reduced release authority lump sum)
Repeal the definition, substitute:
reduced release authority lump sum means:
(a) the amount of the release authority lump sum, reduced by the sum of each reduction made under a previous application of this section to a lump sum benefit to which the person is entitled; or
(b) if more than one release authority lump sum is paid in relation to release authorities issued to the person,the total amount of those release authority lump sums, reduced by the sum of each reduction made under an application of this section, before the last of those release authority lump sums is paid, to a lump sum benefit to which the person is entitled.
Superannuation Act 1990
59 Subsection 16(8A)
After “item 3”, insert “or 4”.
60 Subsection 16(8A) (note)
After “Subdivision 133‑C”, insert “or 134‑C”.
Taxation Administration Act 1953
61 Subsection 2(1)
Insert:
Division 296 general interest charge rate has the meaning given by subsection 8AAD(1A).
62 Subsection 8AAB(4) (after table item 15B)
Insert:
16
296‑215
Income Tax Assessment Act 1997
payment of Division 296 tax or shortfall interest charge
63 Subsection 8AAB(4) (after table item 45C)
Insert:
45D
134‑115 in Schedule 1
Taxation Administration Act 1953
payment of Division 296 debt account discharge liability
64 After subsection 8AAC(2)
Insert:
(2A) If the charge is payable under Division 296 of the Income Tax Assessment Act 1997 on an amount that remains unpaid, then the charge is worked out by multiplying the Division 296 general interest charge rate for that day by the sum of so much of the following amounts as remains unpaid:
(a) the charge from previous days;
(b) the original unpaid amount.
65 Subsection 8AAC(3)
After “section 8AAZF”, insert “of this Act or Division 296 of the Income Tax Assessment Act 1997”.
66 Subsection 8AAC(4)
Omit “neither subsection (2) nor (3) applies”, substitute “none of subsections (2), (2A) and (3) apply”.
67 After subsection 8AAD(1)
Insert:
(1A) The Division 296 general interest charge rate for a day is the rate worked out by:
(a) adding 3 percentage points to the base interest rate for that day; and
(b) dividing that total by the number of days in the calendar year.
68 Section 131‑1 in Schedule 1
After:
(b) a notice of assessment of an amount of Division 293 tax; or
insert:
(ba) a notice of assessment of an amount of Division 296 tax; or
69 After paragraph 131‑5(1)(c) in Schedule 1
Insert:
(ca) a notice of assessment of an amount of *Division 296 tax payable for the income year that corresponds to the financial year;
70 Paragraph 131‑10(1)(a) in Schedule 1
After “3”, insert “, 3A”.
71 Subsection 131‑10(1) in Schedule 1 (after table item 3)
Insert:
3A
an assessment of an amount of *Division 296 tax
that amount of Division 296 tax
72 At the end of section 131‑15 in Schedule 1
Add:
Issuing if you have an unpaid amount of assessed Division 296 tax that is not deferred to a Division 296 debt account
(5) If:
(a) for an income year, you are given a notice of assessment of an amount of *Division 296 tax that is not *deferred to a Division 296 debt account for a *superannuation interest; and
(b) on the 84th day after the day the Commissioner issues that notice, the sum of the following falls short of that amount of tax:
(i) any payments of that tax for the income year that you have already made;
(ii) any amounts that have already been released under this Subdivision for that assessment;
the Commissioner may issue a release authority to one or more *superannuation providers that hold superannuation interests for you.
73 Subparagraph 131‑20(1)(b)(ii) in Schedule 1
Omit “or (4)”, substitute “, (4) or (5)”.
74 At the end of section 131‑65 in Schedule 1
Add:
Exception for voluntary payments of Division 296 tax debt account
(4) Also, if the amount paid in relation to the release authority relates to an amount of *assessed Division 296 tax that is *deferred to a Division 296 debt account for a *superannuation interest:
(a) subsection (1) does not apply in relation to the payment; and
(b) treat the payment as if it were a voluntary payment under section 134‑70 in relation to that *Division 296 debt account.
75 After Division 133 in Schedule 1
Insert:
Division 134,Division 296 tax
Table of Subdivisions
Guide to Division 134
134‑A Deferral determination
134‑B Division 296 debt account
134‑C Compulsory payment
Guide to Division 134
134‑1 What this Division is about
Payment of Division 296 tax is deferred to the extent to which the tax is attributable to defined benefit interests from which no superannuation benefit has yet become payable.
This reflects the fact that money generally cannot be released from defined benefit interests until a superannuation benefit is paid, usually upon retirement.
Subdivision 134‑A,Deferral determination
Guide to Subdivision 134‑A
134‑5 What this Subdivision is about
The Commissioner determines the amount of your tax that is deferred to a Division 296 debt account by working out the extent to which your assessed tax is attributable to defined benefit interests.
Table of sections
Operative provisions
134‑10 Determination of tax that is deferred to a Division 296 debt account
134‑15 Your defined benefit Division 296 tax
134‑20 Determination reducing tax deferred to a Division 296 debt account
134‑25 General provisions applying to determinations under this Subdivision
Operative provisions
134‑10 Determination of tax that is deferred to a Division 296 debt account
(1) The Commissioner must make a determination specifying the amount the Commissioner has ascertained as being the extent to which your *assessed Division 296 tax for an income year is attributable to a *superannuation interest that is or includes a *defined benefit interest.
Note 1: For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901.
Note 2: For general provisions, including review, see section 134‑25.
(2) The amount of *assessed Division 296 tax specified in the determination is deferred to a Division 296 debt account for the *superannuation interest.
(3) However, the Commissioner must not make a determination under this section in relation to a *superannuation interest if, at the time the determination is to be made, the *Division 296 end benefit for the superannuation interest has become payable.
Note: For Division 296 end benefit, see section 134‑130.
(4) Subsection (1) does not apply if the Commissioner ascertains that no part of your *assessed Division 296 tax for an income year is *Division 296 tax attributable to a *superannuation interest that is or includes a *defined benefit interest.
134‑15 Attribution of Division 296 tax to defined benefit interest
(1) For the purposes of section 134‑10, the amount of your *assessed Division 296 tax for an income year attributable to a *superannuation interest that is or includes a *defined benefit interest is to be worked out using the following formula:
(2) However, no part of the *assessed Division 296 tax for the year is attributable to the *superannuation interest if:
(a) your *relevant superannuation earnings for the year for the superannuation interest is nil; or
(b) the superannuation interest is in a *superannuation plan that is a *foreign superannuation fund for the income year; or
(c) the superannuation interest is a *Division 296 excluded interest in relation to the year.
134‑20 Determination reducing tax deferred to a Division 296 debt account
(1) If an amount of *assessed Division 296 tax that is *deferred to a Division 296 debt account for a *superannuation interest is reduced as a result of an amended assessment, the Commissioner must make a determination under this section in respect of the reduced amount.
(2) The amount so determined is a Division 296 deferral reversal for the *superannuation interest.
Note: For variation and revocation, see subsection 33(3) of the Acts Interpretation Act 1901.
134‑25 General provisions applying to determinations under this Subdivision
(1) The Commissioner must:
(a) make a determination as soon as practicable after:
(i) for a determination under section 134‑10,assessing the amount (whether by way of a first assessment or an amended assessment); or
(ii) for a determination under section 134‑20,amending the assessment; and
(b) give you notice in writing of the determination as soon as practicable after making it.
(2) The validity of the determination is not affected because any of the provisions of this Act have not been complied with.
Review
(3) If you are dissatisfied with a determination made under this Subdivision in relation to you, you may object against the determination in the manner set out in Part IVC.
(4) If you are dissatisfied with a decision of the Commissioner not to make a determination under this Subdivision:
(a) you may object against the decision in the manner set out in Part IVC; and
(b) for the purpose of working out the period within which the objection must be lodged, notice of the decision is taken to have been served on you on the day notice is given to you of:
(i) for a determination under section 134‑10,the assessment of the amount; or
(ii) for a determination under section 134‑20,the amended assessment.
Note: For the period within which objections must be lodged, see section 14ZW.
Subdivision 134‑B,Division 296 debt account
Guide to Subdivision 134‑B
134‑55 What this Subdivision is about
The Commissioner keeps Division 296 debt accounts for Division 296 tax that is deferred to a Division 296 debt account for a superannuation interest.
You can make voluntary payments of the Division 296 debt account.
Table of sections
Operative provisions
134‑60 Division 296 debt account to be kept for deferred Division 296 tax
134‑65 Interest on Division 296 debt account balance
134‑70 Voluntary payments
134‑75 Commissioner must notify superannuation provider of Division 296 debt account
Operative provisions
134‑60 Division 296 debt account to be kept for deferred Division 296 tax
Accounts to be kept
(1) The Commissioner is to keep a debt account (a Division 296 debt account) for *Division 296 tax for you for a *superannuation interest, if an amount of your *assessed Division 296 tax is *deferred to a Division 296 debt account for the superannuation interest.
Account to be debited for Division 296 tax
(2) The Commissioner must debit the *Division 296 debt account for the amount of *assessed Division 296 tax that is *deferred to a Division 296 debt account for the *superannuation interest.
134‑65 Interest on Division 296 debt account balance
Interest to be debited at end of financial year
(1) If a *Division 296 debt account for a *superannuation interest is in debit at the end of a *financial year, the Commissioner is to debit the account for interest on the amount by which the account is in debit, calculated at the *long term bond rate for that financial year.
Note: Interest would not be debited to a Division 296 debt account that is no longer being kept by the Commissioner because the assessed Division 296 tax liability being tracked in the account has been finally discharged as mentioned in subsection 134‑105(3).
Remission of interest,Division 296 deferral reversal
(2) The Commissioner may remit the whole or any part of an amount of interest debited, or to be debited, to a *Division 296 debt account under subsection (1) if:
(a) the Division 296 debt account is credited:
(i) under section 134‑70 because of a *Division 296 deferral reversal; or
(ii) because a determination under section 134‑10 is varied or revoked; and
(b) the Commissioner is satisfied that, because of that credit, it would be fair and reasonable to do so.
Remission of interest,special circumstances
(3) The Commissioner may remit the whole or any part of an amount of interest debited, or to be debited, to a *Division 296 debt account under subsection (1) if the Commissioner is satisfied that, because special circumstances exist, it would be fair and reasonable to do so.
134‑70 Voluntary payments
(1) You may make payments to the Commissioner for the purpose of reducing the amount by which a *Division 296 debt account for a *superannuation interest is in debit.
(2) The Commissioner is to:
(a) acknowledge receipt of the payment to you; and
(b) credit the payment to the *Division 296 debt account; and
(c) notify you of the revised balance of the Division 296 debt account.
The credit mentioned in paragraph (b) is to be made when the payment is received.
(3) The amount of a *Division 296 deferral reversal for the *superannuation interest is to be treated as if it were a voluntary payment under this section in relation to the *Division 296 debt account for that interest. However, paragraphs (2)(a) and (c) do not apply in relation to that amount.
134‑75 Commissioner must notify superannuation provider of Division 296 debt account
If the Commissioner starts to keep a *Division 296 debt account for you for a *superannuation interest, the Commissioner must give the *superannuation provider in relation to the superannuation interest a notice saying so.
Subdivision 134‑C,Compulsory payment
Guide to Subdivision 134‑C
134‑100 What this Subdivision is about
The deferred Division 296 tax liability must be paid when a superannuation benefit becomes payable from the superannuation interest.
Table of sections
Division 296 debt account discharge liability
134‑105 Liability to pay Division 296 debt account discharge liability
134‑110 When Division 296 debt account discharge liability must be paid
134‑115 General interest charge
134‑120 Meaning of Division 296 debt account discharge liability
134‑125 Notice of Division 296 debt account discharge liability
Division 296 end benefit
134‑130 Meaning of Division 296 end benefit
134‑135 Superannuation provider may request Division 296 debt account status
134‑140 Division 296 end benefit notice,superannuation provider
134‑145 Division 296 end benefit notice,material changes or omissions
Division 296 debt account discharge liability
134‑105 Liability to pay Division 296 debt account discharge liability
(1) You are liable to pay the amount of your *Division 296 debt account discharge liability for a *superannuation interest if the *Division 296 end benefit for the interest becomes payable.
(2) The liability arises:
(a) unless paragraph (b) applies,at the time the *Division 296 end benefit becomes payable; or
(b) if the Division 296 end benefit is a *superannuation death benefit,just before you die.
Note 1: For paragraph (a), a release authority allows money to be released from the superannuation plan to pay this amount: see subsection 135‑10(1).
Note 2: For paragraph (b), the debt will be recovered from your estate: see Subdivision 260‑E.
(3) Payment of your *Division 296 debt account discharge liability for a *superannuation interest discharges your liability for so much of your total *assessed Division 296 tax for all income years as is *deferred to a Division 296 debt account for the superannuation interest.
134‑110 When Division 296 debt account discharge liability must be paid
The amount of your *Division 296 debt account discharge liability for a *superannuation interest is due and payable at the end of 21 days after the day on which the *Division 296 end benefit for the superannuation interest is paid.
134‑115 General interest charge
If your *Division 296 debt account discharge liability remains unpaid after the time by which it is due and payable, you are liable to pay the *general interest charge on the unpaid amount for each day in the period that:
(a) begins on the day on which the Division 296 debt account discharge liability was due to be paid; and
(b) ends on the last day on which, at the end of the day, any of the following remains unpaid:
(i) the Division 296 debt account discharge liability;
(ii) general interest charge on any of the Division 296 debt account discharge liability.
Note: The general interest charge is worked out under Part IIA. For the rate of general interest charge payable, see subsection 8AAC(3).
134‑120 Meaning of Division 296 debt account discharge liability
The Division 296 debt account discharge liability for a *superannuation interest for which the Commissioner keeps a *Division 296 debt account is the amount by which the Division 296 debt account is in debit at the time the *Division 296 end benefit for the superannuation interest becomes payable.
134‑125 Notice of Division 296 debt account discharge liability
(1) The Commissioner must give you a notice under this section if the *Division 296 end benefit becomes payable from a *superannuation interest for which the Commissioner keeps a *Division 296 debt account.
(2) The notice must state that you are liable to pay your *Division 296 debt account discharge liability for the *superannuation interest and specify:
(a) the amount of that debt; and
(b) the day on which that debt is due and payable.
(3) If you are dissatisfied with a notice given under this section in relation to you, you may object against it in the manner set out in Part IVC of this Act.
(4) However, you cannot object against a notice stating that the amount you are liable to pay is the amount by which the *Division 296 debt account is in debit.
Division 296 end benefit
134‑130 Meaning of Division 296 end benefit
(1) A *superannuation benefit is the Division 296 end benefit for a *superannuation interest if it is the first superannuation benefit to become payable from the interest, disregarding a benefit that is any of the following:
(a) a *roll‑over superannuation benefit paid to a *complying superannuation plan that is a *successor fund;
(b) a *family law superannuation payment;
(c) a benefit that becomes payable under the condition of release specified in item 105 of the table in Schedule 1 to the Superannuation Industry (Supervision) Regulations 1994 (about severe financial hardship);
(d) a benefit that becomes payable under the condition of release specified in item 107 of that table (about compassionate ground);
(e) a benefit specified in an instrument under subsection (2).
(2) The Minister may, by legislative instrument, specify a *superannuation benefit for the purposes of paragraph (1)(e).
134‑135 Superannuation provider may request Division 296 debt account status
(1) If:
(a) a *superannuation provider has been given a notice under section 134‑75 saying that the Commissioner has started to keep a *Division 296 debt account for a *superannuation interest; and
(b) the superannuation provider receives a request to pay the *Division 296 end benefit from the superannuation interest or the Division 296 end benefit becomes payable from the superannuation interest;
the superannuation provider may, in the *approved form, request the Commissioner to advise as to the status of the Division 296 debt account.
(2) If the Commissioner receives a request, the Commissioner must advise the *superannuation provider as soon as practicable whether or not the *Division 296 debt account is in debit.
134‑140 Division 296 end benefit notice,superannuation provider
(1) If the *Division 296 end benefit becomes payable from a *superannuation interest for which the Commissioner keeps a *Division 296 debt account, the *superannuation provider in relation to the interest must give the Commissioner a notice stating the expected date of payment of the benefit.
Note: If a person is dissatisfied with a notice given to the Commissioner under this subsection, the person may make a complaint under the AFCA scheme (within the meaning of the Corporations Act 2001).
(2) The notice must be given within 14 days after the earlier of:
(a) the *superannuation provider receiving a request (if any) to pay the *superannuation benefit; and
(b) the superannuation benefit becoming payable.
(3) However, this section does not apply if the *superannuation provider has not been given a notice under section 134‑75 saying that the Commissioner has started to keep a *Division 296 debt account for the *superannuation interest.
(4) A notice under this section must be given in the *approved form.
134‑145 Division 296 end benefit notice,material changes or omissions
(1) If an entity that gives the Commissioner a notice under section 134‑140 becomes aware of a material change or material omission in any information given to the Commissioner in the notice, the entity must:
(a) tell the Commissioner of the change in the *approved form; or
(b) give the omitted information to the Commissioner in the approved form.
(2) Information required by this section must be given no later than 7 days after the entity becomes aware of the change or omission.
76 Subsection 135‑10(1) in Schedule 1 (at the end of the table)
Add:
4
You become liable to pay your *Division 296 debt account discharge liability for a *superannuation interest
The amount of your Division 296 debt account discharge liability
On the giving of the notice under section 134‑125
77 At the end of section 135‑40 in Schedule 1
Add:
(4) Also, a release authority issued under item 4 of the table in subsection 135‑10(1) (for Division 296 debt account discharge liability) may only be given to the *superannuation provider that holds the *superannuation interest to which the *Division 296 debt account relates.
78 After section 135‑95 in Schedule 1
Insert:
135‑97 Defined benefit interests,releasing amounts to pay Division 296 debt account discharge liability
The exclusion of *defined benefit interests from subsection 135‑75(4) and paragraph 135‑85(c) is to be disregarded for a release authority issued under item 4 of the table in subsection 135‑10(1) (about Division 296 debt account discharge liability).
79 After paragraph 155‑5(2)(f) in Schedule 1
Insert:
(fa) an amount of *Division 296 tax payable for an income year in relation to an individual’s *taxable superannuation earnings for the income year;
80 Subsection 155‑15(1) in Schedule 1 (note)
After “Division 293 tax,”, insert “Division 296 tax,”.
81 After paragraph 155‑30(3)(a) in Schedule 1
Insert:
(aa) the *Division 296 tax payable by you in relation to an income year in relation to your *taxable superannuation earnings for the income year;
82 Subsection 250‑10(2) in Schedule 1 (after table item 37AC)
Insert:
37ACA
shortfall interest charge on Division 296 tax
5‑10
Income Tax Assessment Act 1997
83 Subsection 250‑10(2) in Schedule 1 (after table item 38BB)
Insert:
38BBA
Division 296 tax
296‑205 and 296‑210
Income Tax Assessment Act 1997
84 Subsection 250‑10(2) in Schedule 1 (after table item 136A)
Insert:
136B
Division 296 debt account discharge liability
134‑105 in Schedule 1
Taxation Administration Act 1953
85 Section 280‑1 in Schedule 1
After “Division 293 tax,”, insert “Division 296 tax,”.
86 Section 280‑50 in Schedule 1
After “*Division 293 tax,”, insert “*Division 296 tax,”.
87 After section 280‑102B in Schedule 1
Insert:
280‑102BA Liability to shortfall interest charge,Division 296 tax
(1) You are liable to pay *shortfall interest charge on an additional amount of *Division 296 tax that you are liable to pay because the Commissioner amends your assessment of an amount of Division 296 tax payable in relation to an income year.
(2) However, subsection (1) does not apply to the extent the additional amount of *Division 296 tax is *deferred to a Division 296 debt account for a *superannuation interest.
(3) The liability is for each day in the period:
(a) beginning on the day on which *Division 296 tax under your first assessment of Division 296 tax for that income year was due to be paid; and
(b) ending on the day before the day on which the Commissioner gave you notice of the amended assessment.
(4) However, if an amended assessment reinstates all or part of a liability in relation to a particular that had been reduced by an earlier amended assessment, the period for the reinstated liability begins at the start of the day on which *Division 296 tax under the earlier amended assessment was due to be paid.
Note 1: See section 5‑10 of the Income Tax Assessment Act 1997 for when the amount of shortfall interest charge becomes due and payable.
Note 2: See Subdivision 296‑C of that Act for when the amount of assessed Division 296 tax becomes due and payable. That Subdivision also provides for general interest charge on any part of the additional amount (plus any shortfall interest charge) that remains unpaid after the additional amount is due and payable.
(ba) the amount of the individual’s *relevant superannuation earnings for an income year for any superannuation interest the individual held in the superannuation plan (unless it is an amount taken to be nil under subsection 296‑55(2) of the Income Tax Assessment Act 1997);
Schedule 2,Definition of total superannuation balance
Income Tax Assessment Act 1997
1 Subsection 307‑205(1)
Omit “(1)”.
2 Subsection 307‑205(2)
Repeal the subsection.
3 Paragraphs 307‑230(1)(a) and (b)
Repeal the paragraphs, substitute:
(a) the *total superannuation balance value, at that time, of each of the following *superannuation interests (other than an interest in a *superannuation plan that, at that time, is a *foreign superannuation fund):
(i) a superannuation interest of yours;
(ii) a superannuation interest that supports a *superannuation income stream of which you are a *retirement phase recipient because of the death of another person;
4 Subparagraph 307‑230(1)(c)(iii)
Omit “or the balance in paragraph (b)”.
5 Subsections 307‑230(2) to (4)
Repeal the subsections, substitute:
Modification for structured settlement contributions
(2) However, if a *structured settlement contribution is made at or before a time in respect of you, your total superannuation balance at that time is modified by reducing the sum worked out under subsection (1) by the sum of any such structured settlement contributions.
Family law splits
(3) For the purposes of the provisions mentioned in subsection (5), you are treated as having a *superannuation interest in a *superannuation plan if:
(a) you are a *non‑member spouse in relation to a superannuation interest that:
(i) is an interest in that superannuation plan; and
(ii) is subject to a *payment split but remains an interest of the *member spouse; and
(b) circumstances prescribed by the regulations for the purposes of this paragraph exist.
(4) For the purposes of the provisions mentioned in subsection (5), the regulations must specify whether the *superannuation interest that you are treated as having is to be treated as being a *defined benefit interest.
Note: Regulations made for the purposes of paragraph 307‑230A(1)(a) may specify the total superannuation balance value of the interest.
(5) The provisions are the following:
(a) subsection (1) of this section;
(b) section 307‑230A;
(c) the *Division 296 tax law.
6 After section 307‑230
Insert:
307‑230A Total superannuation balance value
(1) The total superannuation balance value, at a particular time, of a *superannuation interest is:
(a) if the regulations specify a value, or a method for determining a value, for the purposes of this paragraph,the specified value, or the value determined in accordance with the specified method; or
(b) otherwise,the total amount of the *superannuation benefits that would become payable if:
(i) the individual to whom the superannuation interest relates had the right to cause the superannuation interest to cease at that time; and
(ii) the individual voluntarily caused the superannuation interest to cease at that time.
(2) Regulations made for the purposes of paragraph (1)(a) may specify a value or method in different ways depending on any of the following matters:
(a) the individual to whom the *superannuation interest relates;
(b) whether the superannuation interest is in the *retirement phase;
(c) whether the superannuation interest is or includes a *defined benefit interest;
(d) the *superannuation income stream (if any) supported by the superannuation interest;
(e) if the superannuation interest is an interest in a *superannuation fund or *approved deposit fund,the rules of the fund;
(f) if the superannuation interest is an interest in an *RSA,the terms and conditions of the RSA;
(g) the *superannuation provider in relation to the *superannuation plan in which the individual holds the superannuation interest;
(h) whether the superannuation interest is subject to a *payment split;
(i) whether the individual is treated as having the superannuation interest under subsection 307‑230(3);
(j) the death of the individual;
(k) any other matter.
(3) Regulations made for the purposes of paragraph (1)(a) may provide for a value to be determined wholly or partly by reference to:
(a) methods or factors that are approved by legislative instrument by a Minister:
(i) for the purposes of the regulations; or
(ii) for the purposes of another Act or legislative instrument; or
(b) an *actuary’s certificate.
(4) Regulations made for the purposes of paragraph (1)(a) may specify circumstances in which a *total superannuation balance value is nil.
(5) Subsections (2), (3) and (4) do not limit the regulations that may be made for the purposes of paragraph (1)(a).
7 Subsection 995‑1(1) (definition of accumulation phase value)
Repeal the definition.
8 Subsection 995‑1(1)
Insert:
total superannuation balance value has the meaning given by section 307‑230A.
9 Subsection 995‑1(1) (paragraph (d) of the definition of value)
The amendments of the Income Tax Assessment Act 1997 made by this Schedule apply in relation to working out what your total superannuation balance is, or what the total superannuation balance value of a superannuation interest is, at a particular time if that time occurs:
(a) just before 1 July 2026; or
(b) on or after 1 July 2026.
Taxation Administration Act 1953
11 Paragraph 390‑5(9)(b) in Schedule 1
After “*value”, insert “or *total superannuation balance value”.
Schedule 3,Other amendments relating to superannuation
Income Tax Assessment Act 1997
1 Subsection 293‑65(2) (note 3)
Omit “Division 135”, substitute “Division 131”.
2 At the end of Division 293
Add:
Subdivision 293‑H,Other provisions
Guide to Subdivision 293‑H
293‑245 What this Subdivision is about
This Division has effect despite subsection 73(3A) of the Australian Capital Territory (Self‑Government) Act 1988.
Table of sections
Operative provisions
293‑250 Interaction with the Australian Capital Territory (Self‑Government) Act 1988
Operative provisions
293‑250 Interaction with the Australian Capital Territory (Self‑Government) Act 1988
This Division has effect despite subsection 73(3A) of the Australian Capital Territory (Self‑Government) Act 1988.
Note: That subsection relates to the remuneration of judges and magistrates of the Australian Capital Territory.
3 Application of amendments
Section 293‑250 of the Income Tax Assessment Act 1997, as inserted by this Schedule, applies in relation to the 2012‑13 income year and later income years.
Superannuation (Government Co‑contribution for Low Income Earners) Act 2003
1 Paragraph 12C(1)(b) and subparagraph 12C(2)(c)(i)
Omit “$37,000”, substitute “the dollar amount mentioned in item 1 of the table for that income year in Part I of Schedule 7 to the Income Tax Rates Act 1986”.
2 Paragraph 12E(2)(b)
Omit “$500,$500”, substitute “the amount worked out under subsection (3A) for that income year,the amount worked out under subsection (3A) for that income year”.
3 After subsection 12E(3)
Insert:
(3A) For the purposes of paragraph (2)(b) the amount for an income year is the amount worked out using the formula:
where:
eligibility threshold amount for income year means the dollar amount mentioned in item 1 of the table for that income year in Part I of Schedule 7 to the Income Tax Rates Act 1986.
charge percentage has the same meaning as in subsection 17A(2) of the Superannuation Guarantee (Administration) Act 1992.
4 Application
The amendments made by this Schedule apply to the 2027‑28 income year and later income years.