What are the changes?

Currently, regardless of your superannuation balance or Total Superannuation Balance (TSB), investment earnings in superannuation accumulation phase are taxed at a maximum rate of 15%. Investment earnings in ‘retirement phase income stream’ are tax free.

From 1 July 2026, if your TSB exceeds $3 million, an additional tax of 15% will be applied to the portion of investment earnings attributable to your TSB over $3 million and a further 10% (totalling 25% extra) if your TSB is more than $10 million. This additional tax is referred to as Division 296 tax (Better Targeted Super Concessions).

The additional tax is going to be assessed to individuals, who then have an option to either deduct the relevant tax amounts from superannuation or pay personally outside super.

From 1 July 2026

For the 2026/27 year (Transition Year)

If your TSB at the end of the 2026/27 financial year exceeds the large super balance threshold (LSBT set at $3 million), you will be subject to Division 296 tax of 15% on the proportion of earnings relating to your TSB that exceeds the $3 million.

In addition, if your TSB at the end of the 2026/27 financial year exceeds the very large super balance threshold (VLSBT, set at $10 million), you will be subject to additional Division 296 tax of 10% (totalling 25% extra) on the proportion of earnings relating to your TSB that exceeds the $10 million.

The Division 296 tax will apply from 1 July 2026, meaning the first affected financial year is the 2026/27 year.

For subsequent years

In considering whether you have exceeded the LSBT or VLSBT for a financial year and are liable to Division 296 tax, your TSB used will be the greater of your TSB amounts either immediately before, or at the end of, that financial year.

Indexation

Going forward, both thresholds, the $3 million and the $10 million, will be indexed to the Consumer Price Index (CPI). The $3 million threshold will be indexed at $150,000 increments, and the $10 million threshold will be indexed at $500,000 increments.

Are there any exemptions from Division 296 tax?

Yes. Exemptions include superannuation income streams of a child (generally established with proceeds of a superannuation death benefit) and superannuation interests with structured settlement contributions. In addition, for the 2026/27 Transition year only, an exemption will be applied to individuals who died during this financial year, other than on  30 June 2027.

What is ‘Total Superannuation Balance’ (TSB)?

Broadly, the TSB is the sum of all amounts you have in the Australian superannuation environment, with limited exceptions. The TSB includes accumulation interests, Transition to Retirement income streams, Retirement phase income streams, and certain Defined Benefit interests. Certain super interests of judges and other State higher level office holders are exempt.

Foreign superannuation interests are also excluded when calculating the TSB.

You can check your TSB by logging on to your MyGov account, then selecting ‘Australian Taxation Office’.

Will unrealised capital gains be taxed?  

Not necessarily. When the draft legislation was initially released, it suggested that unrealised capital gains within large super funds may also be taxed. However, this was amended in the final legislation before it became law.

The legislation specifically recognises that some funds have owned assets for a long time and they may have grown substantially in value since they were first purchased. It would be unfair to apply Division 296 tax to all that historical growth. Hence, special relief is available to reset the cost base of these assets before 30 June 2026.

Capital Gains Tax (CGT) cost base update opportunity before 30 June 2026

For the CGT calculations, a super fund can elect to update the cost base of its assets for Division 296 purposes only to protect the historical growth of certain assets. However, the original cost base will be applied when determining the income of the fund for ordinary tax purposes (outside of Division 296).

While the cost base resetting may not be available to members of large superannuation funds, such as master trusts or wrap accounts, it may be an important decision to make for trustees of smaller funds, such as a Self Managed Superannuation Fund (SMSF).

For Self Managed Superannuation Funds

If appropriate, SMSF trustees can revalue their fund assets on 30 June 2026, record the adjusted cost base and opt-in to reset the cost base using the approved form by the due date of their 2026/27 annual tax return. By doing so, for Division 296 purposes only, capital gains accrued on fund assets prior to 30 June 2026 will be excluded from taxable super earnings.

If the super fund elects to adjust the cost base of its assets, it must be done on an “all or nothing” basis. This means the super fund cannot apply the adjustment to some assets only. They must opt in for all assets or for none at all. Therefore, this should be carefully considered as some assets may be in a loss position at 30 June 2026, and the decision to opt in for the relief may not be appropriate based on the fund’s circumstances.

In addition, if the fund elects to adjust the cost base of its assets, it will result in the fund having two separate cost bases for each asset, one for the CGT purposes and one for Division 296 purposes

Considering the level of complexity, SMSF Trustees should seek tax advice from a qualified tax practitioner and make a decision before 30 June 2026.

Strategies to reduce your TSB

There may be opportunities and strategies to consider in the 2026/27 FY to manage your TSB, however, these strategies should be considered on an individual basis. For some clients, there may be an opportunity to withdraw certain amounts from super with a view to invest in alternative investments. However, these opportunities may not be available to all, and when available, should be carefully considered as this action may have an impact on other matters, such as personal tax, estate planning, and certain government concessions.

What can you do next?

If you are uncertain how Division 296 tax will impact you or wish to discuss your options for managing the introduction of this tax, reach out today. You can contact your financial adviser to discuss your options to better understand the outcome based on your personal circumstances.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

This Budget reaches further into the finances of ordinary investors than most. It touches directly on how property investors are taxed, how capital gains are treated, and how much room the RBA has to cut interest rates. Here’s what you need to know.

Negative gearing

The biggest shift affects negative gearing. From 2027-28, new investors in established residential property will no longer be able to offset rental losses against their other income. Losses can still be carried forward and used against future property income, but the ability to reduce a wage or salary tax bill through a loss-making investment property is being wound back. New builds are exempt, so the tax concession remains intact for those investing in newly constructed homes.

Capital Gains Tax

The capital gains tax (CGT) discount is also changing. The current 50% discount will be replaced by a system that taxes “real” gains only (i.e. gains above inflation) at a minimum rate of 30%. This applies to assets purchased from now, with the new rules taking effect from 2027-28. The change applies to all assets owned by individuals, trusts and partnerships, including shares, property and pre-1985 assets.

Electric Vehicle tax pull-back

Electric vehicles have also lost some of their tax appeal. The fringe benefits tax exemption that made novated leases on EVs particularly attractive to employees is being phased out. If you were considering an EV through a salary packaging arrangement, the numbers will look different going forward, and it’s worth running them again before committing.

Discouraging discretionary trusts

Discretionary trust distributions will be subject to a minimum 30% tax rate. If you use a discretionary family trust as part of your wealth or estate planning structure, the implications depend on your specific circumstances.

Personal income tax

On the positive side, the bottom income tax rate is being cut by 1 percentage point (worth around $5.15 per week), a $1,000 standard deduction is being introduced, and there’s a $250 tax offset for work-related income coming in 2027-28. This applies to salary and wages, and, where eligible, business income from sole trader activities.

Pension Supplement changes for people travelling overseas

The rules for the Pension Supplement will change for people who are travelling overseas. The maximum Pension Supplement will continue for up to 12 weeks when the person is temporarily overseas, instead of the current 6-week arrangement. After 12 weeks, the Pension Supplement will stop.

The bigger economic picture

The budget remains in deficit for the foreseeable future, with the government now projecting a return to surplus by 2036. The revenue windfall from higher commodity prices has been allocated to reducing fiscal debt.

Government spending as a share of GDP is projected to be around 26.5% over the next decade, well above the pre-Covid average of 24.8%. More spending in the near term adds to inflationary pressure, which makes the RBA’s job harder. Many economists still expect more than one rate hike in 2026, with cuts likely only at some point next year.

The budget is unlikely to resolve Australia’s housing affordability problem. The government’s own figures project the tax changes will reduce housing supply by around 35,000 homes over the next decade, which is the opposite of what’s needed in a market already running 60,000 homes per year short of its 240,000-home annual target.

A Quick Note on Legislation

These Budget announcements generally require legislation to take effect. Although given the majority Labor holds in parliament, this is likely to pass with little opposition.

What Does It Mean for You?

Tax and budget changes rarely affect everyone the same way. Whether you own investment property, hold growth assets, benefit from a family trust structure, or are simply trying to understand what the income tax cuts mean for your take-home pay, the details matter. It is important that you reach out to your financial adviser and accountant, who can help you make sense of the changes and tailor a plan that best suits your circumstances.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

Are you on track?

Your 50s are a reckoning. They’re usually the first decade when retirement stops being a distant idea and becomes a near-term reality. The hard question to ask now is: Do I have enough?

The ASFA Retirement Standard (December quarter 2025) sets the benchmark for a comfortable retirement at $730,000 for a couple and $630,000 for a single homeowner¹, and that assumes you own your home outright and will receive a part Age Pension. A comfortable retirement now costs $77,375 per year for couples and $54,840 for singles² with retirees bearing cost-of-living increases that consistently outpace general inflation.

If your current balance falls short of your target, don’t panic. Your 50s are genuinely your most powerful accumulation years, and you still have meaningful levers to pull.

Making the most of your super contributions: your final window

The tax advantages of super never disappear, but the time to let compounding work is running out. Now is the moment to use every dollar of available cap space:

• Salary sacrifice. Consider redirecting pre-tax income into super, to cut your taxable income and simultaneously growing your balance. The concessional contributions cap for 2025–26 is $30,000, including the Superannuation Guarantee, amount salary sacrificed to super or personal contributions where a tax deduction is being claimed.
• Carry-forward contributions. If your total super balance was below $500,000 at the start of the year, you can access unused concessional cap space from the previous five years, potentially making a much larger tax-deductible contribution in a single year.
• Downsizer contributions. If you’re selling the family home and meet the criteria, you can contribute up to $300,000 per person ($600,000 per couple) into super as a downsizer contribution, regardless of other caps. This is perhaps one of the most powerful catch-up tools available to pre-retirees.
• Transition to retirement (TTR). Once you reach preservation age (currently age 60), a TTR strategy lets you salary sacrifice more aggressively into super while drawing a tax-free income stream to maintain your take-home pay. Eliminating debt before you stop working

Carrying debt into retirement is one of the most corrosive risks to your financial security. Retirement income, whether from super or the Age Pension, is typically lower and less flexible than your working income.

Consider prioritising in this order:

• Non-deductible debt first. Credit cards and personal loans carry the highest interest rates with no tax offset. Eliminate these immediately.
• Aim to enter retirement debt-free on your home. Beyond the obvious cost saving, your home is usually excluded from the Age Pension assets test, making it one of the most valuable assets you can hold.
• Investment debt. Interest on investment loans is generally tax-deductible, making it a lower priority than personal debt, but still worth a repayment plan.

Don’t overlook the gap years

Your superannuation preservation age is 60, but Age Pension eligibility doesn’t begin until 67. That’s a potential seven-year gap where you’ll be entirely dependent on your own savings, which could include super, investments, and any part-time income. Many pre-retirees underestimate this stretch. Stress-testing your retirement plan against this gap is an essential exercise to do now, not at 59.

The decisions you make in the next decade will shape the retirement you get. There’s still time to make them count.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

1 https://www.superannuation.asn.au/media-release/asfa-retirement-standard-super-balances-needed-for-comfortable-retirement-reach-all-time-high/
2 https://www.superannuation.asn.au/media-release/asfa-retirement-standard-super-balances-needed-for-comfortable-retirement-reach-all-time-high/

The silent wealth drain hiding in your bank account

There’s a particularly insidious kind of financial leak, one that never feels painful because each individual charge is so small. Subscriptions.

Westpac customer data reveals that average monthly household spending on subscriptions increased 11% in 2025¹ against a backdrop of a cost-of-living crisis where every dollar matters. Australian households now carry an average of 3.3 streaming services alone, with around one in four subscribers regularly exceeding their own entertainment budget², and that’s before software, fitness apps, meal kits, news platforms, and cloud storage are added to the pile.

The uncomfortable truth: most Australians have genuinely no idea what they’re spending. Three in ten Australians admit to losing up to $600 a year on duplicate services and apps they no longer use³.

Audit your subscriptions: the five-minute exercise worth hundreds

Open your banking app right now and search for every recurring direct debit. Then ask three questions about each one:

• Have I used this in the past 30 days? If not, cancel it today, not “this weekend.”
• Am I paying for more than I need? Downgrading from a premium tier to a standard tier on a single streaming service can save $80–$100 annually.
• Am I doubling up? Many Australians are paying for duplicate services, multiple cloud storage plans, overlapping music apps, or gym memberships alongside fitness app subscriptions.

The compound cost of ‘just $X a month’

Here’s the reframe that changes behaviour: stop thinking in monthly amounts and start thinking annually, and then in investment terms.

$15 per month feels trivial. $180 per year feels manageable. But $180 invested annually at 7% pa over 20 years becomes over $8,000⁴. Apply that logic to every unnecessary subscription you’re carrying, and the wealth impact becomes genuinely confronting. Convenience has a price, and the bill is paid in your future financial security.

Conscious consumption: spend on purpose, not by default

• Rotate, don’t accumulate. No major streaming service requires a lock-in contract. Subscribe for a month, consume what you want, then cancel and rotate.
• Annual plans over monthly. Where you genuinely use a service year-round, annual billing typically saves 15–20%.
• Review every six months. Set a recurring calendar reminder. Services you valued in July may be worthless by January.

Where your adviser adds value

A financial adviser doesn’t audit your Netflix account, but we do something more valuable. We embed subscription awareness into a broader cash flow strategy.

By mapping your actual spending against your financial goals, an adviser helps you see not just what subscriptions cost, but what they displace, whether that’s super contributions, debt repayment, or investment savings.

Small behavioural changes, consistently applied, are among the highest-return interventions an adviser makes. The maths is simple; accountability is where advice earns its keep.

The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.  We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.

1 The subscription squeeze: How streaming costs are bleeding Australian households dry | YourLifeChoices
2 Australians double-down on subscription video as budgets grow to fund more services — Telsyte
3 Australians keep subscribing, entertainment services, SVOD market see steady growth | Mi3
4 Compound interest calculator – Moneysmart.gov.au