In this guide
Division 296 tax changes pass through parliament
The Albanese Government’s controversial reduction of tax concessions for individuals with a super balance of more than $3 million has finally passed through both houses of parliament, along with a boost to the low-income superannuation tax offset (LISTO).
The Senate passed both the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 (known as Division 296 tax) and Building a Stronger and Fairer Super System Imposition Bill 2026 on 10 March, with the bills now awaiting Royal Assent.
Under the legislation, Division 296 tax of 15% will apply to earnings on the portion of your total super balance that is above $3 million. A further 10% tax will apply to earnings on the portion of your balance that is above $10 million, bringing the total Division 296 tax on this portion to 25%. This is in addition to the existing super tax rate of 15% on earnings in the accumulation phase, hence a tax of 30% on earnings on the portion of your super balance between $3 million and $10 million, and 40% on earnings on the portion of your super balance above $10 million.
Greens Economic Justice spokesperson Senator Nick McKim said the Greens would support the passage of the bill as a “down payment on genuine, progressive tax reform in the budget”.
At the other end of the super spectrum, changes to LISTO will provide a boost of up to $810 per year to the super accounts of low-income workers, with an average of $410. In a statement, Treasurer Jim Chalmers said: “These reforms will mean more super for around 1.3 million Australians, including 750,000 women and around 550,000 young people under the age of 30.”
Learn more about Division 296 (including calculator) and what to consider before June 30.
Troubling default life insurance gap
Thousands of Australians are missing out on life insurance cover since reforms to default insurance arrangements in superannuation were introduced in 2019.
New research from the Association of Superannuation Funds of Australia (ASFA) calculates that approximately 5,000 Australians have died without life insurance cover since 2019. ASFA estimates insurance could have been worth an aggregate of $670 million a year to their families.
Another 11,000 individuals are missing out on a total of $1.5 billion in total and permanent disability (TPD) benefits each year.
In 2019, the Protecting Your Super (PYS) package reforms required funds to cancel insurance on member funds that had been inactive for 16 months. And as part of the Putting Members’ Interests First (PMIF) Act, also introduced in 2019, default insurance was removed for members under 25 and for those with balances less than $6,000.
“I really feel for the families who’ve been caught by some of the unintended consequences of the PYS and PMIF legislation,” ASFA’s chief policy and advocacy officer James Koval said.
To solve these issues and improve insurance cover, ASFA is recommending:
- Extending opt-out insurance to all members aged 21 and over, rather than 25
- Applying default cover to new full-time employees from day one rather than waiting for their balance to grow to $6,000
- Replacing automatic cancellation of cover on inactive accounts with an enhanced opt-out process.
Curbs on super access for family violence perpetrators
The Federal Government has released a consultation paper and opened public consultation on reforms to prevent family and domestic violence perpetrators from accessing victims’ super death benefits.
Under current superannuation law, a super fund may be required to pay death benefits to a person who used family and domestic violence against the deceased.
A consultation paper on preventing perpetrators from accessing victims’ super death benefits proposes three broad options for reform:
- Broad trustee discretion
- A prescribed approach that would involve legislative amendments to enable the setting aside of a person as an eligible beneficiary in certain circumstances involving family and domestic violence
- Referral to the deceased estate or court.
“There are too many instances where families have watched on in horror as a woman has had her life made a misery by someone either physically assaulting her or controlling her in a way that has isolated and degraded her,” the minister for Social Services Tanya Plibersek said.
“The idea that the tormentor should be rewarded by receiving superannuation after the death of that woman is adding untold misery to the surviving family members and friends of those women,” she added.
Submissions can be made until 15 April 2026.
Leave a Reply
You must be logged in to post a comment.