Australia's A$3M Super Tax Just Passed｜What SMSF Property Holders Must Do Before July 2026

Added: 2026-05-05

[00:00:00]It's finally here. Australia has passed legislation. If your superannuation exceeds 3 million, you'll have to pay extra tax. Although this news has been around for several months, the final version passed last month is quite different. On March 10th, the Senate officially passed the final version of division 296. The Greens cut out the harshest clause, but added a new provision. The new law will officially take effect from July 1st. First of all, don't think that having 3 million in your superannuation is something far removed from you. By the time you and I retire, it's very likely that our superannuation will exceed 3 million, especially since there are still many years to go. This is especially true for those who buy property within their superannuation. The speed at which your assets accumulate will be beyond your imagination. So, make sure you listen to this 3-minute video all the way through.

[00:00:41]Compared to the previous proposal, the final version has three core changes.

[00:00:45]First, it's not the entire account that gets taxed at the higher rate. Only the earnings on the portion exceeding 3 million are taxed. For example, if your total is 4 million, only that extra 1 million falls into the new tax bracket.

[00:00:55]The second point, which is also the most crucial, is that previously you had to pay tax as soon as your account increased in value on paper. Now, it's that you only pay tax when you actually sell. That problematic clause that counted unrealized gains has been scrapped by the Green Party. It makes sense after all. How could you possibly tax unrealized gains? You can't even measure money you haven't actually earned yet. So, the law that passed taxes only realized gains, just like the normal CGT rules, still allowing for 1/3 capital gains inclusion and loss deductions. The third point is that a new tax bracket has been added. All along, the tax rate on pension earnings has been 15%. Now, for amounts between 3 million and 10 million, there will be an additional 15% totaling 30% for the portion exceeding 10 million, an extra 25% will be added making it a total of 40%. Both thresholds are CPI-linked and adjusted in $150,000 and $500,000 increments, so criteria won't tighten over time. For SMSF property holders, these changes shifted from an expected disaster to something manageable. If you don't sell while holding, regardless of appreciation, division 296 means no extra tax. Of course, rental income is realized income. If your rental income exceeds 3 million, well, big boss, you really should pay some tax to help subsidize people like me, the less fortunate. Second point, June 31st of this year. Remember this date. The law is giving self-managed super funds a one-time opportunity to protect historical capital gains.

[00:02:14]To put it simply, you can choose to reset the cost base of all your assets to the market value on that day. Any increase in your property's value before June 1st is protected and won't be included in the future scope of division 296. Let's do the math. Suppose you bought a property for $800,000 in 2010, and now it's valued at $2.4 million. If you don't reset the cost base, the entire $1.6 million increase will be counted as income when you sell in the future. If you do reset it, only the gains after July 2026 will be counted, which won't be much. The money you save from this move could be enough for you to buy another property. Of course, there are three restrictions to this.

[00:02:47]First, this is a one-time action and it's irrevocable. Second, if you want to reset, you have to reset all your assets together. You can't pick and choose.

[00:02:55]Third, you need an independent valuation as of June 30th, 2026.