Division 296: New Tax Super Balances >$3M | From 1 July 2026, based on 30 June 2027 balance.
An additional 15% tax applies to the proportion of super fund earnings attributable to individual balances exceeding $3 million. Balances above $10M attract a further 10%. The tax can be paid personally or from your super. For some clients this new tax on earnings between $3M-$10M will still be better than alternative strategy options.
| Balance | Earnings proportion taxed | Div 296 additional tax |
| $3M – $10M | Pro-rata above $3M | 15% |
| Above $10M | Pro-rata above $10M | 25% (additional 10% tier) |
Capital Gains Tax Reform | Gains Arising After 1 July 2027
The 50% CGT discount introduced in 1999 is replaced with inflation indexation for established investment properties and investments held for more than 12 months. A 30% minimum tax on net capital gains applies. This change applies to individuals and trusts only (companies and super funds are unchanged). New builds are exempt from the changes, and owners of new builds can choose whichever method produces the lower tax bill.
Two transitional methods — you choose at time of sale:
| Method | How it works | Best for |
| 1 — Revaluation | Asset valued at 1 July 2027.
Pre-2027 gain → 50% discount. Post-2027 gain → inflation indexed. |
Assets where most gain already accrued by mid‑2027. |
| 2 — Time apportionment | Total gain split proportionally by time under each regime. | Long-held assets with gain accruing steadily throughout. |
For unlisted assets, namely property and private businesses, it will be important to consider the market value of assets as at 1 July 2027 as a key planning tool for the future.
Negative Gearing | Established Properties Purchased After 12 May 2026
| Already own | Buying new build | Buying established now | |
| Negative gearing | Grandfathered — unchanged for life of holding. | No change.
Fully preserved. |
Normal until 30 June 2027. From 1 July 2027, losses offset rental income / capital gains only. |
| Capital gains | 50% discount to 1 July 2027, then inflation-indexed on gains after. | Choose 50% discount or indexation — whichever is lower. | Inflation-indexed. 30% minimum tax on net gains. |
Key implication: The impacts of the above changes are likely to reinforce superannuation as one of the most tax-effective structures to use, as it retains the one-third CGT discount on capital gains, with tax of up to 30% on investment returns for balances up to $10M, which can be withdrawn tax-free once a condition of release is satisfied. The other key capital gains tax exemption is the main residence.
Proposed Trust & Company Structures – This Was a Surprise
The Budget went further than most predicted by including changes to the tax payable on trust distributions, taking effect from 1 July 2028. The difficulty is that regulations are yet to be published. If enacted as proposed, this change will impact a substantial number of clients, including those with long-established structures and structures detailed in estate planning documents. The changes propose a flat 30% tax payable by the trustee, which is then a non-refundable rebate to the beneficiary. If the trust distributes to a corporate beneficiary, some commentators are saying that another 30% tax may apply on the distribution. We feel this area is deeply unpopular and therefore expect there may be further adjustments before the final rules are legislated. If you control a trust or hold assets in a family structure, it is important to watch this space.