On 13 October 2025, Treasurer Jim Chalmers announced further changes to the proposed Division 296 tax on superannuation balances over $3 million.

Nearly two months on there is still limited detail. Legislation has not yet been introduced to Parliament, so several key issues remain unclear. These include how the Capital Gains Tax (CGT) discount will apply and whether any gains accrued before 1 July 2026 will be grandfathered.

Superannuation funds currently receive a one third CGT discount on assets held for more than 12 months. While the Government has stated the revised methodology will align with existing taxable income principles, it has not confirmed whether this includes the CGT discount.

There is also no guidance on how current or prior year capital losses will be treated. This leaves open the possibility that tax could be calculated on gross realised gains rather than net taxable gains.

There is speculation that a cost base reset may occur on 1 July 2026, similar to the approach taken when the Transfer Balance Cap was introduced on 1 July 2017. If this is the case it is likely to reduce the incentive for trustees to sell assets before 1 July 2026.

Whilst this would be welcomed news, it is still uncertain how unrealised gains up to that date will be taxed.  One proposition is that affected members be required to pay tax immediately on pre 1 July 2026 gains, reduced by any applicable CGT discount. Another is that tax may be deferred until the asset is eventually sold. Either approach would add compliance complexity to ensure that correct tax cost bases are recorded and used when the assets are sold.

We will continue to provide updates as more information becomes available.