The Tax Institute welcomes the opportunity to make a submission to the Treasury in respect of its consultation on the:
- exposure draft Income Tax Assessment (1997 Act) Amendment (Building a Stronger and Fairer Super System and Other Measures) Regulations 2026 (draft Regulations); and
- accompanying explanatory memorandum (draft EM).
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.
Consultation timeframes
The draft Regulations and draft EM have been released for consultation for only three weeks, including the Easter break, significantly limiting the time available for stakeholders to analyse the material and prepare comprehensive feedback. This continues the pattern of limited consultation periods in the development of the Division 296 measure.
- The Better Targeted Superannuation Concessions Consultation Paper (2023) was open for consultation for only two weeks.
- The Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023 and explanatory materials were also subject to a two-week consultation window.
- The Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025, Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2025 and explanatory materials for Division 296 were released immediately before the Christmas holiday period on 19 December 2025 and concluded on 16 January 2026, when many businesses were closed and stakeholders were unavailable to provide feedback.
Despite repeated requests from industry and stakeholders for adequate consultation periods, these limited timeframes persist.
Short consultation periods increase the likelihood of unintended consequences, reduce confidence in the policy development process, and risk producing measures that do not reflect the operational realities faced by funds, administrators, advisers and members. The significant concerns raised regarding the original Division 296 design, which ultimately led to a revised approach, illustrate the importance of allowing sufficient time for technical analysis and meaningful stakeholder engagement.
We strongly recommend that future consultations, particularly where measures are complex, high-impact, or system-wide in their application, provide appropriate timeframes to ensure well-considered and durable policy outcomes.
Summary of key technical issues
The Tax Institute acknowledges the Government’s policy objective underlying Division 296, namely, to strengthen the integrity of the superannuation system by imposing an additional tax on earnings attributable to very large superannuation balances. We support integrity measures where they are clear, proportionate and capable of being administered effectively.
However, we have identified a number of areas where the current design and proposed administration of Division 296 raise practical implementation challenges. These areas would benefit from further refinement, including:
- the application of Division 296 following the death of an individual;
- simplifying the cost base reset methodology to improve workability for funds, particularly SMSFs;
- allowing capital losses to be carried forward for Division 296 purposes, consistent with established CGT principles;
- addressing the differential treatment of SMSFs and large APRA-regulated funds in the recognition of capital gains to ensure neutrality and equity for members;
- reducing the compliance burden associated with family law valuations for defined benefit interests by allowing the use of existing, readily available valuation measures; and
- managing the impact of fund-level amendments on member assessments, particularly where amendments occur several years later or affect deceased estates.
In particular, the interaction between Division 296 and the administration of deceased estates would benefit from additional clarity to ensure liabilities can be identified and managed in a timely and fair manner, without delaying death benefit payments or exposing legal personal representatives (LPRs) to unintended personal risk.
Taken together, these issues are not matters of policy intent, but of implementation and administrability. With targeted legislative or regulatory refinements, Division 296 can operate more smoothly, provide greater certainty to funds and individuals, and better align with the realities of superannuation administration, while still achieving the policy intent.
We discuss each of these issues in detail and provide our recommendations in Appendix A.
The Tax Institute is the leading forum for the tax community in Australia. We are committed to shaping the future of the tax profession and the continuous improvement of the tax system for the benefit of all. In this regard, The Tax Institute seeks to influence tax and revenue policy at the highest level with a view to achieving a better Australian tax system for all.
We welcome the opportunity to work with Treasury and the Government to refine these aspects of Division 296, and ensure the regime achieves its objectives in a manner that is fair, practical and sustainable.