ATO data set suggests Div 296 not the narrow tax it’s being sold as: auditor

Naz Randeria, director of Reliance Auditing Services, said Div 296 “crosses a line” that superannuation policy has never crossed before.

“It taxes accumulated capital, not behaviour. Once that principle is accepted, there is no logical barrier to extending it beyond super. That should concern anyone who values certainty in Australia’s tax system,” Randeria said.

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“[This tax] continues to be presented as a narrowly targeted measure aimed at a small group of wealthy Australians, but that narrative does not hold up when you look at the ATO’s own data.”

The data, published last week on data.gov.au, revealed that in 2024, the average SMSF member balance was about $835,000 and the average SMSF balance around $1.55 million to $1.6 million.

“These are not extravagant outcomes. They represent Australians who have saved steadily over decades — small business owners, professionals, families and retirees who have done exactly what the superannuation system was designed to encourage,” Randeria said.

“It is also important to remember that this data is a snapshot in time. It reflects 2024 balances, and anyone working in this sector knows how quickly asset values can move. Through 2025, we have seen material strength across different asset classes at different points — property, equities and even traditional defensive assets like gold. Superannuation is a long-term system built on compounding and market cycles.”

She continued that even with indexation, a balance-based tax will inevitably capture more people over time as asset values grow. 

“Div 296 may have been modified in its final form, but it still represents a fundamental shift in how superannuation is taxed. It is not a tax on contributions or income in the conventional sense. It is triggered by accumulated capital exceeding a threshold,” she said.

“That distinction matters, because it changes how Australians perceive the security and predictability of the superannuation system.”

She added that the data published on the top 100 SMSFs also highlights something often ignored in the public debate.

“Larger SMSFs are not cash boxes. They are typically invested in long-term assets such as commercial property, farmland, private businesses and unlisted investments,” she said.

“These are patient, productive investments held over long periods. A balance-based tax makes no distinction between liquid income and capital invested in real assets supporting businesses, tenants and employment.”

Furthermore, Randeria said, it is misleading to treat SMSFs as a fringe structure as there are now more than 650,000 SMSFs with around 1.2 million members.

“This is a mainstream part of Australia’s retirement system. These are ordinary Australians who have chosen to take responsibility for their retirement outcomes and invest over decades,” she said.

“Undermining confidence in this sector has consequences well beyond the cohort initially captured by a new tax.”

However, Randeria said this is not the biggest concern.

“Rather, it is the precedent Div 296 sets. Once government accepts the principle that accumulated asset values can be taxed simply because they exceed a threshold, it becomes very difficult to argue where that principle should stop,” she said.

“If superannuation balances can be taxed on this basis, what prevents future governments from applying similar logic elsewhere?”