The revised Division 296 tax is likely to retain separate treatment of capital gains for a super fund and its members, with the latter required to pay the proposed impost if those gains push them over the $3 million threshold, an SMSF specialist has noted.
Cooper Partners Financial Services director Jemma Sanderson said the original version of the Division 296 measure viewed tax payable by the fund and by a member as distinct items without one offsetting the other and its revised form would do the same.
“It was going to be two buckets with your super fund bucket sitting over there where you only pay tax in that bucket on realised capital gains, but you might have been paying tax along the way in the individual bucket on unrealised gains,” Sanderson said during a presentation at The Tax Institute National Superannuation Conference in Sydney today.
“Let’s say over the period of time from 1 July 2025 to the 2029 financial year, you paid a few hundred thousand dollars in Division 296 tax individually that you can attribute to a particular asset ratcheting up in value and then you sell it.
“It was, and will still be, two different buckets and the tax you paid along the way for Division 296 purposes that you could attribute to that particular asset does not offset any tax the fund has to pay on the actual sale of that asset.
“[With the original Division 296 tax] there were questions about whether you can use one tax to offset the other. The answer to that is no and it’s going to be the same from that perspective [under the revised version].
“So the super fund has its own position and the individual is going to be subject to this tax if they are within the group where they have got more than $3 million. That will be based on their balances and they don’t intersect otherwise.”
