A leading industry actuary has suggested individuals with high total super balances looking to move assets out of the retirement savings environment to avoid paying Division 296 tax must consider the structures these benefits will be moved into, but indicated the choice of investment vehicle has been impacted by the 2026 federal budget.
To this end, Heffron managing director Meg Heffron identified three structures most people would be considering, but pointed out they are not without flaws.
“In the past you probably would have looked at a discretionary trust, a family trust, but we’ve been shafted on those [by the federal budget], so we know we have a minimum tax rate on the discretionary trust distributions of 30 per cent,” Heffron told delegates at the Class Ignite 2026 conference in Sydney today.
“I’m imagining a lot of your clients are now looking towards companies.
“Companies are nice and simple [and] there is a 30 per cent tax on income.”
However, she acknowledged investing via a company structure raised the issue of how the wealth is subsequently accessed.
“We could lend the capital [from super] to the company so that if they wanted the capital back, they could [receive it as] a repayment of the loan. But all the future growth and income earned within the company is going to be trapped there until someone is willing and able to take a dividend,” she said.
Further, she recognised this may not be ideal for death benefit purposes as beneficiaries may want to receive a lump sum payment rather than a series of dividends.
According to Heffron, these elements are making investment or insurance bonds a more attractive option for investing monies exited from the super environment as a result of the Division 296 measure.
“[That’s] why bonds are so attractive because we don’t have to pay any extra tax to get the money out as long as we leave it where it is for 10 years,” she explained.
“So I’m not surprised to see a lot of talk about bonds.”
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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