Labor’s 2026 Super Tax Changes Are Better But Still Not Great

After all, tax rate increases are still tax rate increases. But at least they’re not as bad as the original super tax changes outlined by Treasurer Jim Chalmers several months ago. Those super fund members with balances above $3 million should take note — this blog post is specifically for you.

What were the originally proposed super tax changes?

Division 296 was proposed as a way to whack the wealthy with a bigger tax bill, namely adding an extra 15 per cent tax on super earnings where the super balances are above $3 million. Don’t know what we’re talking about? Take a look at our blog post on the proposed changes here.

The thing that concerned most in this bracket was the fact this extra tax would be purely on paper gains. For property investors, for example, rather than looking at any increase in an SMSF property investment’s rental income, the proposal would measure the change in super balance from one year to the next. That’s purely a gain on paper (not necessarily in reality).

The second part of the proposal to cop plenty of flack is that the $3 million cap of super balances was not set to rise with inflation — meaning more and more super fund members would be caught in this bracket as both property values head north and inflation reduces the value of a dollar.

Overall, plenty of self-managed super fund members have considerable balances in their funds. But many of these trustees simply held onto assets through multiple growth cycles, realising large capital gains but not necessarily having the income growth alongside it.

But thankfully, not all of these proposed changes are being adopted.

What’s changing under the new super proposal?

The total tax rate on earnings for super balances between $3 million and $10 million will be 30 per cent. And for the 8,000 Australians with balances over $10 million the total tax rate will be 40 per cent.

Impressively it seems the Treasurer has taken the mass criticism on board regarding indexing these balances, with both the $3 million and $10 million thresholds being indexed (increasing with inflation).

Finally, one of the ugliest parts of the original proposals has been scrapped, being tax on unrealised gains. Under the new proposal, trustees will only be taxed on the sale of assets — not on the mere increase in super balance from year to the next (i.e. a paper gain).

So, in the end, would super fund trustees have preferred these proposals go under the rug? Of course. The wealthy and wise will be hit with additional tax obligations as a result of these changes. However, these changes are far more practical than those originally proposed by Treasurer Jim Chalmers when we last wrote on the subject back in September.

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