What everyone needs to know about the Division 296 Super Tax
I’m joined by Drew Meredith, one of the clearest wealth thinkers in the country, to unpack the revised Division 296 Super Tax and what it means for everyday and wealthy Australians.
This week on Prime Time, I’m joined by Drew Meredith, Director and financial adviser at Wattle Partners, and one of the clearest wealth thinkers in the country, to unpack the revised Division 296 Super Tax and what it means in real life.
There’s been a lot of confusion (and noise) since the changes were announced, but the dust is starting to settle and it’s time to understand what this new tax actually means, who it impacts, and how to think about your super if you’re edging close to those thresholds.
Drew and I break down how the new tax works, the differences between balances over $3 million and $10 million, the role of indexation, and what kinds of planning conversations are already starting, especially for people in SMSFs.
If you’ve seen this topic floating around and haven’t quite wrapped your head around it yet, this is a great place to start.
LISTEN TO THIS EPISODE OF THE PODCAST HERE:
Highlights of the conversation:
What the revised Division 296 tax actually does (and doesn’t do): Drew walks through how the updated rules work, including the $3 million threshold and the new additional tier above $10 million, and why this is a tax on earnings above the cap, not a tax on your entire super balance.
Who will actually be affected - and how small that group really is: Based on current data, around 80,000 people (roughly 0.5% of Australians with super) are expected to be impacted, with fewer than 20,000 people holding balances above $10 million. We talk about why this matters and why most people don’t need to panic.
Why SMSFs will feel this first (and hardest): Drew explains where the real complexity sits: calculating the proportion of a fund above $3M or $10M at 30 June each year. This is likely to increase administration and accounting costs for SMSFs, which tend to hold larger balances, while members in industry and retail funds may see far less friction.
Execution is the real challenge - not the tax itself: The complexity isn’t about paying more tax; it’s about how earnings are calculated, reported and attributed. We unpack why this will mean more calculations, more professional involvement, and higher costs for some structures.
Should people be ‘doing something’ about this now? For most people, the answer is no. Drew is very clear: even with Division 296, super remains the most tax‑effective place to invest for retirement.
Who you should actually be speaking to if you’re impacted: If you are nearing these thresholds, Drew explains why you’ll likely need both a financial adviser and an SMSF‑literate accountant, and why retirement specialists are often best placed to navigate this space.
The biggest misunderstanding Drew wants cleared up: Super is still designed to fund retirement, and good advice, structure and long‑term thinking matter far more than reacting to a policy change.
From Bec’s Desk
I’m still in London as this episode lands, having lots of interesting conversations about how different countries support and tax retirement savings and what that says about what governments value. Which makes this week’s topic feel very timely.
How the wealthier end of the super system will be taxed from next year is one of those issues that doesn’t affect everyone, but it does matter if you’ve done well, plan to do well, or just like understanding the rules of the game you’re playing. Division 296 has generated plenty of noise, but many want it explained simply, without jargon, which is exactly why I wanted to bring Drew back on the show.
This is a smart, calm, grown-up conversation about what’s actually changing, who it really affects, and why super is still an incredibly powerful vehicle for retirement savings. And yes, if you find yourself deep in a barbeque debate about “the $3 million tax”, you’ll be very glad you listened.
Have a great week! I’m looking forward to being home very soon… missing the warm weather
Bec Xx
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