Super Alert: Div 296 tax on superannuation

The tax bill for a $3 million soft-cap on superannuation (Div 296 tax) was put before Parliament this week. A motion was raised to dismiss the bill, and while this motion was defeated, it means the government is unlikely to get the bill through the Senate before the Federal Government election is announced.

While there are still a few sitting days in late March, they are usually reserved for budget-related matters.

For this reason, the bill is likely to become an election issue. The Coalition has already indicated that they would not proceed with this measure if elected, so the likelihood of the Division 296 tax being imposed is becoming less likely with each passing day.

While the bill is not yet ‘dead’, it certainly seems to be on ‘life support’.

BDO comment

For clients with larger self-managed superannuation fund (SMSF) and superannuation balances, advice from our superannuation team has always been to wait and see how and when the tax would be imposed before rushing to take any action.

As the bill remains up in the air, we continue to recommend clients hold until they are in a position to make an informed decision. Should you like to discuss the bill further in the context of your personal situation, please contact your BDO adviser for more detailed information.

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