Tax Reform Watch: What’s Proposed — And What’s Actually Happening

Why Tax Reform Matters Right Now

Australia is at a crossroads. Tax reform is being debated with increasing intensity. Some changes are certain; others are speculative. As your trusted advisers, we believe it’s vital you know what’s law, what’s proposed, and what might affect you — your super, your income, your spending.

Confirmed: Division 296 — Super Tax for Big Balances

One of the most concrete reforms is Division 296, effective from 1 July 2025. If your total superannuation balance (TSB) exceeds $3 million at the end of a financial year, you’ll face an additional 15% tax on those earnings in super that relate to how much your balance is over $3 million. Importantly, this includes growth in asset values — even if you haven’t sold the assets (unrealised gains).  (Source:https://treasury.gov.au/)

For example: if your TSB at 30 June 2026 is $4.5 million, the portion over $3 million is $1.5 million. A corresponding fraction of your earnings will be subject to Division 296. The rest remains taxed under the ordinary super earnings rules.  (Source: https://www.superguide.com.au/)

This change is designed to apply only to individuals, aggregating all their super accounts. It’s not per fund. So even if you have several accounts, they are added together. If your total balance remains under $3 million, you won’t be liable.  

Under Debate: GST & Other Tax Reforms

Meanwhile, proposals around the GST are among the most hotly contested. The PBO has published several options in its “Progressive GST” report, including:

• Raising GST to 15%, possibly removing exemptions (such as on food, health, education).  (Source: https://www.pbo.gov.au/)
• Pairing rate increases with a rebate or GST-free threshold for all adults to reduce regressivity. One plan suggests ~$3,300 per adult to offset costs of GST on basics.  (Source: https://www.katechaney.com.au/)
  

These are not law. Government statements (including from the Prime Minister) confirm that while these ideas are being discussed, they are not adopted policy.  (Source: www.theaustralian.com.au/)

What's Important to Clarify

• Super balances over $3 million taxed: This is not abandoned. Division 296 is moving forward. The idea that it’s been repealed or dropped is incorrect.
• “Tax on unrealised gains in super abandoned”: Also incorrect. Unrealised gains are part of the “earnings” base being proposed under Division 296.  
• Many sources conflate proposals with law. It’s important any article clearly label what is proposed vs. what has passed or is about to pass.

What This Means for You

1. Check your super balance: If you expect to exceed $3M, begin planning now. Evaluate asset mix (liquid vs illiquid), and whether any adjustments are appropriate.
2. Review your investment strategy with attention to timing (realising gains vs keeping growth), tax consequences, and potential cash flow for paying Division 296 if required.
3. Stay informed on the GST proposals. If changes go forward, cost of living might be affected. Be ready to understand how rebates or thresholds might offset changes.
4. Consult a tax or super professional (like those at RJS) before making big moves. Uncertainty in proposals means risk in acting prematurely.

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Division 296 is more than an idea — it’s a confirmed reform for individuals with large super balances. GST changes and other tax reforms are still up in the air. Knowing the difference between what’s law vs. what’s proposed will help you make smarter decisions.

Want RJS to help you model what these changes might mean for your super or your finances? Book a session with one of our advisers today.