The Tax Institute welcomes the opportunity to make a submission to the Treasury in respect of its consultation on the:
- exposure draft Treasury Laws Amendment (Better Targeted SuperannuationConcessions) Bill 2025 (draft Bill);
- exposure draft Superannuation (Better Targeted Superannuation Concessions)Imposition Bill 2025 (Imposition Bill);
- accompanying explanatory memorandum (draft EM); and
- additional guidance paper titled ‘Better Targeted Superannuation Concessions’ (Guidance Paper).
In the development of this submission, we have closely consulted with our National Superannuation Technical Committee to prepare a considered response that represents the views of the broader membership of The Tax Institute.
Proposed Division 296 introduces an additional 15% tax on earnings on superannuation balances above $3 million and a further 10% tax on earnings on balances above $10 million. The initial proposal for Division 296 was met with considerable criticism from tax professionals and the general public, primarily because the relevant superannuation balances were not indexed, and the measure proposed to tax unrealised capital gains, among other related issues.
We welcomed the Treasurer’s announcement on 13 October 2025 of new approaches to the proposed measure, taking into account alternative solutions to address the significant concerns raised regarding the original design.
However, the release of the draft Bill, Imposition Bill, and explanatory materials just before the holiday season, has meant that approximately half of the consultation period has taken place over a time when most businesses were completely shut and many professionals are still away and unavailable. This has not left adequate time for stakeholders to comprehensively respond and raises questions about the overall effectiveness of the consultation process.
We note that we had raised this issue when the Better Targeted Superannuation Concessions Consultation Paper was released in 2023 was open for consultation for only two weeks, and the earlier draft Bill, Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 and explanatory materials were open for consultation from 3 October 2023 to 18 October 2023 (again, only two weeks). This pattern of short consultation periods appears to be a recurring trend despite continual requests from stakeholders for adequate consultation periods.
Rushed consultation undermines confidence in the process and, increases the risk of poor policy outcomes and unintended consequences, potentially compromising the integrity of the tax system and adversely affecting the broader community. The previous Division 296 proposal was clear evidence of this.
We trust that collectively we can learn from these experiences and work towards a better approach to consultation and the design of new measures.
In this submission, while we provide our observations on the technical aspects of the draft Bill, we note that many fundamental aspects of the proposed tax remain contingent on yet-to-be-determined regulations. Several elements in the current draft Bill appear inequitable, discriminate among different kinds of superannuation funds, and result in double taxation. We are of the view that the issues outlined below should be addressed before the draft Bill is introduced in Parliament. We strongly advise against rushing this measure through Parliament simply to achieve a target date without adequate consideration and resolution of outstanding concerns.
We also recommend a post-implementation review of the Division 296 tax between 12 months and 24 months of its operation, to verify whether the law is operating as intended, and is effectively and efficiently meeting the Government’s objectives of improving equity and the fiscal sustainability of the superannuation system. A post-implementation review should also assist to uncover any issues that arise in practice following enactment of the measure.
Our detailed response and recommendations to improve the draft Bill and the draft EM are contained in Appendix A.
Our submission is intended to be a starting point for further consultation. We consider it essential to maintain an ongoing dialogue among the Treasury, the Australian Taxation Office (ATO) and the tax profession on the draft Bill for Division 296 tax, and on ways to improve them. Such an open and collaborative process will help ensure the Division 296 tax is fair and not unduly burdensome for taxpayers.
Please download the full submission to read more.