Who Will Be Affected?

• Individuals with more than $3 million in total superannuation across all accounts.
• The tax does not apply to your entire balance, only to earnings related to the amount exceeding $3 million.
• It is not based on actual withdrawals or realised gains, but on an annual calculation set by the ATO.

How It Will Work?

1. Only applies to earnings attributed to the portion of your super that exceeds $3 million.
2. Includes unrealised capital gains, even if the assets haven’t been sold.
3. The ATO will calculate the tax liability. You can pay it personally or request the amount to be released from your super account.
4. Certain individuals, such as children receiving super income streams or those with structured settlements, may be exempt.

Example Scenario

• Opening balance: $3.5 million
• Closing balance: $3.7 million
• Contributions: $100,000
• Withdrawals: $50,000
• Net earnings: $150,000

The portion above $3 million is $700,000.
Taxable earnings attributable to this portion = $28,350
Division 296 tax = 15% of $28,350 = $4,252.50

What Should You Do?

If your super balance is under $3 million – No action is required.

If over $3 million – There is still time to assess the impact and make strategic decisions. However, it’s important to wait until the final version of the law is passed before making any major moves such as withdrawing funds. Withdrawing prematurely could limit your ability to reinvest into super due to contribution caps.

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