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An SMSF specialist has broken down some common myths surrounding the incoming Division 296 super tax.
Mythbusting common misnomers surrounding Div 296
23 June 2025
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7 minute read
At the ACE25 Accounting Conference & Expo last Friday, SMSF specialist and actuary Meg Heffron tackled some common myths associated with the Division 296 super tax.
The tax, which could take effect from the 2025–26 financial year if passed in the Senate, would see super earnings on amounts above a $3 million threshold taxed at an additional 15 per cent.
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Heffron stressed that the idea that “everybody should get their money out of super in the next week before the 30th of June 2025” was the “biggest myth ever.”
She warned fund holders against making rash decisions to withdraw from their super before 30 June 2025, explaining that the tax would not be applied based on their balance on that date.
If the bill passed the Senate, the tax would be calculated based on fund members’ balance at the end of the incoming financial year. Heffron flagged 30 June 2026 as the key deadline for fund members keen to avoid paying the Div 296 tax.
“Even if you have got clients who are determined that they are never going to pay $1 of this tax, they are going to get their super down below $3 million, at least remind them they don't have to do it this year,” she said.
Another common myth Heffron debunked was that the policy would hit every SMSF with a value above $3 million. She explained that the tax was related specifically to personal super balances and would only apply to people who held over $3 million individually.
“You could have two members of a couple, they can have $3 million each, and they'll never pay this tax. It doesn't matter how big the SMSF is,” Heffron said.
Another myth she encountered frequently was that prior capital gains would be captured under the new tax.
Under the Div 296 regime, the ATO would only consider whether the fund member’s super balance had earned income over a given financial year, she noted.
“It's looking at future growth. So no one cares what growth you've had so far,” Heffron said.
The final misnomer Heffron addressed is that the Div 296 tax would make super a poor investment vehicle, and that all fund members holding over $3 million should move their assets outside of super.
She encouraged wealthy superannuation balance holders to crunch the numbers to decide whether it would be worth moving assets out of super to avoid the Div 296 tax.
Heffron stressed that the tax savings would be highly dependent on a range of factors including the fund’s growth rate, the nature of assets that would have to be moved out of super, and the effective tax rate the funds would be subject to outside of super.
“If it's outside super, tax is going to happen out there too, unless someone in this room has found a magic way of avoiding tax outside super.”
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