The $3 Million Super Tax Is Coming — And Accountants Are Furious

A post in the Small Business Accountants & Advisers Brain Trust, Australia Facebook group recently blew up — triggering hundreds of comments and reactions from accountants, bookkeepers, and financial professionals across the country.

At the heart of it? Division 296 — the Federal Government’s plan to apply an additional 15% tax on superannuation balances over $3 million. But what’s really fanning the flames is the fact that this tax will be applied to unrealised gains.

In plain terms: if your client’s super balance increases in value — even if no assets are sold and no cash hits the account — they’ll be taxed anyway.

It’s a move that’s being called everything from “fair” to “insane.” One side argues it’s about reducing tax concessions for the wealthy. The other calls it regressive, complex, and dangerous.

Whatever your view, one thing’s certain: this has created yet another layer of complexity for advisers, accountants, and bookkeepers to untangle for their clients.

What is Division 296?

Here’s the basic rundown:

From 1 July 2025, individuals with total super balances above $3 million will be subject to an additional 15% tax on the earnings associated with the portion of their balance that exceeds that threshold.

What makes this different from other super taxes is that it includes unrealised capital gains. So, if the market lifts and your client’s fund increases in value — even without any assets being sold — they’ll still pay tax on that paper gain.

And if the market drops the following year? There’s no refund mechanism for unrealised losses. The calculation resets annually. Which means a sharp drop could leave clients worse off, without any recourse to claw that tax back.

That’s the bit many advisers are calling out as unbalanced — especially given the volatility of superannuation portfolios in recent years.

Why this exploded online

The post in the Small Business Accountants & Advisers Brain Trust, Australia group tapped into some raw nerves. Hundreds of accountants chimed in — and let’s just say the comments weren’t neutral.

Here’s a snapshot of what people are saying:

• “This is a war on savers and anyone who plans responsibly for retirement.”

• “You’re punishing people for holding long-term investments. This isn’t how tax is meant to work.”

• “Tall poppy syndrome in full force. We tax success and reward poor planning.”

• “Add this to the list of policy ideas that sound good in theory and are a nightmare to implement in reality.”

A recurring theme was frustration over the lack of symmetry in the policy — tax the gains, but don’t recognise the losses.

Others flagged the added workload for accountants. More modelling. More tax strategy conversations. More complexity with SMSFs. All for a rule that affects a tiny slice of the population.

But that’s the point — it’s not about how many people are impacted. It’s about what the rule represents.

Not everyone is against it

Amongst the backlash, a few voices came to the defence of the policy.

Their argument? If you’ve got $3 million or more in super, you’re hardly struggling — and you’re still accessing a highly concessional tax environment most Australians can only dream of.

Some key points raised:

• Super wasn’t designed to warehouse unlimited wealth — it’s for retirement income, not intergenerational wealth transfer.

• The tax only applies to the portion above $3 million, not the entire balance.

• Spouses can restructure their funds to stay below the threshold.

• NZ has used a similar regime (Fair Dividend Rate) since 2007 — and it hasn’t tanked their investment landscape.

So yes, there are ways to plan around it — but they’ll take time, advice, and execution. Which puts even more pressure on accountants and advisers to get ahead of it early.

What firms need to do now

If you’re working with clients who are anywhere near the $3 million mark — now is the time to start the conversation. You’ll need to:

• Educate clients on what unrealised gains are and how this tax works.

• Model outcomes based on potential market movements and fund performance.

• Review fund structures, especially for couples who can distribute balances more strategically.

• Revisit pension strategies, estate planning, and drawdown options.

• Assess the value of removing funds from super before the rule kicks in.

Even clients under the threshold might start asking questions — especially those with high growth assets, SMSFs, or long-term retirement plans.

You don’t want to be caught scrambling to explain it when the first notices land in inboxes. Start preparing your talking points now — or risk getting swamped next financial year.

Bigger picture: is this the start of something else?

Many commenters raised a deeper concern — that this move sets a precedent. Once the government establishes the idea of taxing paper wealth, what stops it from expanding that logic to other asset classes?

Could we see:

• Unrealised gains on property taxed in future?

• Trusts and family entities being targeted in a similar way?

• Broader reforms shifting from taxing realised income to estimated wealth increases?

Even if this remains isolated to super, it shows a shift in how tax policy is being applied — and who bears the burden of calculating, reporting, and explaining it. (Hint: it’s not Treasury.)

Final thoughts

This isn’t just a technical change buried in legislation. It’s a signal.

A signal that super’s generous tax treatment is under review. A signal that the government’s willing to tax money that hasn’t hit anyone’s bank account yet. And a signal that advisers and accountants will need to explain yet another complex rule with no simple answer.

Whether you’re for it or against it — Division 296 is happening. And it’s time to get ahead of it.

Want to see the original commentary that sparked this blog? Check out the Small Business Accountants & Advisers Brain Trust, Australia group on Facebook.