Superannuation partner at TAG Financial Services, Jason Roccasalvo, told the 2025 TAG Super and Tax Strategies Day that the time to start planning for the Division 296 super tax was now.
“What we have is enough certainty to start planning with our clients. The numbers might change, but we need to start planning now,” he said.
“If we’re not planning now with our clients, our chance to act is going to be narrow, and we might have clients that have bad, bad results because we haven’t got to them early enough.”
He warned that clients with ‘lumpy’ assets in their super funds, such as real estate, would need ample time to restructure their affairs.
“It’s really important to be planning now. Because if we don’t talk to our clients now, and we get law in January or February … if they’re trying to navigate these lumpy assets and make a decision to get under threshold by 30 June, you’re not allowing a lot of time,” he said.
The Albanese government has signalled that it would go ahead with its Div 296 super tax with the support of the Greens. It is set to introduce a new 15 per cent tax on a portion of superannuation earnings over a $3 million threshold.
While disgruntled clients could take their money out of superannuation to avoid the Div 296 tax, Roccasalvo noted that other means of holding money – companies, trust structures and in an individual’s name – came with their own sets of taxes.
Moving money into other structures could entail liabilities including capital gains tax, stamp duty and land tax, death tax and liquidity considerations.
“The best thing that you can do with [clients] is condition them that, unfortunately, [they’re] going to have to pay a little bit more tax. It’s just a question of how and where,” Roccasalvo said.
“It’s a hard thing to say to clients, because, I don’t know about you, but our clients hate paying tax. But that’s a really hard thing to say, but it’s the most real thing that you can tell people.”
Michelle Griffiths, investment and wealth partner at TAG Financial Services, explained that the most tax-effective strategy would depend on an individual client’s financial situation.
“Look at this as a holistic decision, not have your clients go straight to what is this tax on the $3 million and just look at that in isolation. I think that’s dangerous,” she said.
Roccasalvo added that when clients altered the distribution of their wealth, it could have implications for estate planning.
“We’ve got clients that might be on, say, a second marriage. They may want their spouse to inherit their super and they might want their non-superannuation wealth to make its way to their children,” he said.
“If you’re changing the distribution of that wealth, you’re also changing your estate plan.”
He added that the burden of navigating the Div 296 tax would be ongoing, but the largest adjustments would happen during its first year of operation.
“This is not a one-year tax. This is an annual tax that’s coming in. The big concerns are in the first year, because that’s probably where most of the heavy lifting and most of the decision making for your clients is going to occur,” Roccasalvo said.
“But each and every year, if you have a client that’s hell bent on missing or dodging this tax, you’re going to need to be conditioning them every year as to what the thresholds and caps are.”
Its pathetic of the government to have the new tax bill listed with a start date of 1st July the current FY and essentially leaving tens of thousands of superannuants in limbo. How can anyone plan responsibly especially given what it at stake? For many this tax is heralding such a massive change to their retirement plans that they have now been completely upended with still no clear road ahead. It is unconscionable from this government who refused to discuss this prior to the election (a perfect example was Chalmers on his debate of the Treasurers in the lead up electio ).
Whole life plans are in limbo.
This government has no integrity to keep this hanging in the air, especially given that they now likely have the numbers to get it through, which they previously probably did not.