“The Division 296 changes represent a significant but necessary change of position from the government. When given the opportunity to consult with Treasury when the measures were first introduced in 2023, we were told in no uncertain terms that the only things not up for discussion were the threshold and the earnings calculation but the industry persisted.

“Of course, the devil will be in the details of the measures when they are introduced, but from what has been provided via the initial announcement, it seems promising.”

Miller added that maintaining the originally announced changes to how a member's total superannuation balance is calculated is an important step in the right direction and hopes it will be retained.

“But ultimately having a Treasury that is more open to consultation will be important in getting the measures across the line by the 1 July 2026 start date,” he said.

“Some of the challenges will lie in the exceptions to the earnings rules, noting that there is mention of adjustments for contributions and pension, but having further clarity on issues such as insurance proceeds and total permanent disability will be important as well.”

Naz Randeria, founder and managing director of Reliance Auditing Services, said the sector now has an opportunity to work collaboratively with the government to design an earnings calculation that is practical, equitable, and transparent.

“This will be crucial to ensuring that the new Div 296 tax achieves its stated goals without causing undue complexity or unintended consequences,” Randeria said.

“I acknowledge the government's commitment to index the $3 million threshold and introduce a second tier at $10 million, with earnings above that level taxed at 40 per cent. Indexing these thresholds is critical to ensuring the integrity of the system over time. Without it, more Australians would be unfairly captured by bracket creep due to inflation, undermining the very purpose of long-term retirement savings.”

Randeria added that the strong uptick in the establishment of SMSFs signals a growing desire among Australians to take control of their retirement savings.

“This trend clearly shows that people are willing to self-fund their retirement if given the right policy settings and incentives to save. With the right framework in place, SMSFs offer the flexibility and autonomy many Australians are seeking to secure their financial future,” she said.

“However, continued industry consultation remains essential.”

Meg Heffron, director of Heffron, said the new legislation is a better design, but noted that it does not necessarily mean everyone will be better off.

“There will be some losers. Certainly, those with over $10 million will now seriously consider the role of super for some of their balance – their extra tax has gone up from 15 per cent to 25 per cent, bringing the total to 40 per cent on a proportion of their earnings. This is even more important if the new ‘earnings’ definition doesn’t allow for discounting of capital gains,” she said.

“Even those with more than $3 million in super (but less than $10 million) who have very large capital gains built up already (pre 1 July 2026) might need to give this some thought. If there is no carve out for capital gains built up before 1 July 2026, would they be better to realise their gains this year, before the new rules come in?”

She added that the legislation is not due to be tabled until after Christmas, followed by consultation, and will not leave much time for amendments before the 1 July 2026 proposed start date.

Nicholas Ali, head of technical services for Neo Super, said it was interesting that it was the government that “kyboshed” Div 296 tax.

“After the election, they had the numbers to get the measure over the line, but baulked due to the pressure from friendly quarters over the controversial aspects of the tax – that being a lack of indexation and taxing unrealised gains,” Ali said.

“Whilst we have ended up with a less ghoulish Frankenstein, we have still ended up with Frankenstein. People with more than $10 million in super will most likely a) satisfy a condition of release and b) will now invest in other entities or asset classes that do not have the restrictions super has, nor the death tax.

“And maybe that is what the government wants people to do. I still do not understand why the government did not reintroduce compulsory cashing. It was always the simplest, most equitable option and in line with the original purpose of superannuation. Instead, we have legislation that is contorted like a pretzel.”

David Busoli, principal for SMSF Alliance, said the new measures deal with most of the Div 296 criticisms, which were focused primarily on the lack of cap indexation and tax on unrealised gains.

“The devil is always in the detail, but I’m confident that it can now be satisfactorily finalised,” he said.

“It’s a pity that we all had to go through such a long period of intense activity to win the changes that could have been incorporated into the original proposal if the government had acted in good faith from the outset. Better late than never, I suppose.”

Bryn Evans, private wealth adviser at Integro Private Wealth, said the changes are good news for those who have chosen to hold assets such as farmland, which will only incur tax on the increase in value if the asset is sold and cash proceeds are available to settle the tax.

“There is no mention in the announcement of how discounts will apply to capital gains, where super funds currently receive a discount of a third for assets held for more than 12 months,” Evans said.

“Without such a discount, there may still be implications as to the ownership structure of assets such as farmland. There will be two thresholds which will now be indexed in line with the transfer balance cap, and the earnings will be taxed at a higher rate of 30 per cent between $3 million to $10 million and 40 per cent above $10 million.”

Evans added that the announcement noted that Treasury will now engage stakeholders to determine how this could be implemented.

“My view is the main reason for the previous design was the relative ease in calculation by the ATO because many super funds calculate earnings and determine tax obligations at the fund level, not the individual level,” he said.

“Now that members within a fund will be taxed at different rates on earnings, there could be a need for super funds to do more work to implement these changes. It will be interesting to see how the government tackles this, as well as what costs will be incurred by funds and their members to comply with the proposed rules.”