Written

For

The

Australian

-

How

wealthy

retirees

can

legally

sidestep

the

new

super

tax

Think the government's new super tax is a done deal for wealthy retirees? Think again. The revised Division 296 tax may have dropped the widely criticised "tax on unrealised gains" element, but for those with balances above $3m, the game has only just begun — and the workarounds are already taking shape.

Here's the state of play: from July 1, 2026, super earnings above $3m will be taxed at 30 per cent, and above $10m at 40 per cent. That's a serious step up from the current 15 per cent maximum. But the way the new rules are structured hands a clear advantage to funds that favour capital growth over income.

Consider two $5m super funds. Fund A holds growth-focused land assets — no sales, no income, no Division 296 tax. Fund B holds income-producing shares, bonds and property generating 10 per cent income. Fund B is looking at around $79,000 in combined tax. Same balance, vastly different outcomes.

So what are the strategies emerging? First, tilt towards growth assets and defer realising capital gains. Second, use the withdrawal rules to your advantage — if your balance jumps mid-year, a well-timed pension withdrawal can bring the assessable figure back down. Third, and this is where it gets interesting, split assets across multiple SMSFs. Put high-income and high-turnover assets in one fund capped at $2m (tax-free pension phase), and hold the growth-oriented assets in a second fund. It's structural planning, but it's entirely legal.

My take? The government has set a threshold and drawn a line, but wealthy retirees rarely sit passively when tax rules shift. Expect a wave of restructuring advice over the next 18 months. The Treasury's revenue projections from Division 296 may end up looking rather optimistic once the accountants and advisers get to work.