SMSF members should not take immediate action to sidestep the proposed Division 296 impost, even though it looks likely it will be passed into law, given the tax bill will not apply for more than 13 months.
Heffron managing director Meg Heffron said it was likely the draft bill for the tax, which will have to be reintroduced into parliament, would pass through the Senate with the government only needing the support of the Greens.
“There have been many voices calling for a change in method [to calculating the tax], that is, one that doesn’t tax unrealised gains,” Heffron said in a blog post on the administration provider’s website.
“In the last parliament, concern over that specific design feature on the crossbench was enough to discourage the government from actually putting it to a vote in the Senate. I expect that resistance will also be quieter or at least less of a barrier to the government in the next parliament.”
Despite this, she said the start date was still uncertain, but even if the 1 July date is retained, it was not the point at which the tax would be applied to superannuation balances.
“Surely we will at least see the start date deferred. I can’t imagine a single super fund, small or large, software provider or regulator will be ready to deal with a new method for calculating total super balance (TSB) by 1 July 2025,” she said.
“For those who are now madly scrambling and want to avoid the tax altogether, it’s important to remember that even a 1 July 2025 start date doesn’t mean it is critical super balances are down to $3 million within the next few months.”
She pointed out the tax would be based on the size of the TSB and by how much it exceeds $3 million at 30 June 2026 at the earliest and any fund member who is under that amount will not pay anything, regardless of how large their balance was at 30 June 2025.
Some superannuants may even choose not to act if the tax they will pay is small or they record investment losses, she added.
“Someone whose balance is only just over $3 million at 30 June 2026 will pay very little Division 296 tax, no matter how strong the growth in their super during 2025/26,” she said.
“In fact, for those who make losses for Division 296 tax purposes during what is shaping up to be a very uncertain 2025/26, it might be better to stay in the tent to at least capture those losses and use them to offset future Division 296 tax amounts.”
