Why the new super tax could force you to rethink your inheritance

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From July 1 this year, the newly legislated Division 296 superannuation tax laws will come into effect, reshaping how countless Australians approach their retirement and succession planning.

The new rules will impact anyone with a total super balance exceeding $3 million and applies to every type of super fund – self-managed super funds (SMSF), retail, industry, pension or other.

Balances between $3 million and $10 million will now be subject to a 30 per cent tax on super fund earnings, and balances exceeding $10 million will face a 40 per cent tax rate.

While this is a significant change in how the super of millions of Australians will be taxed, for SMSF users in particular there is still some upside to be found.

Reset now, save later

Under the legislation, SMSF users are being offered a one-off opportunity to avoid unexpected tax bills in the future.

This ‘Capital Gains Tax reset’ is a chance to reset the cost of assets to market value before the legislation comes into effect, updating the value of all assets to be reflective of their worth at the time of the new laws being introduced. In essence, this works to create a clean break between ‘old growth’ and ‘new growth’ of assets.

Super was never designed as an........

© Brisbane Times