Super tax backflip will make life easier for financial advisers

ifa

Following more than two years of handwringing over how to handle the proposed increase in the tax on earnings for super balances above $3 million, Treasurer Jim Chalmers reversed course on Monday and conceded on essentially every measure that critics had attacked. Division 296 will go ahead; however, it will no longer apply to unrealised gains, and the threshold will be indexed. Chalmers even pushed back the start date to 1 July 2026 so that there is time to make proper plans. New in the updated tax plan is a second threshold – balances above $10 million won’t just cop the additional 15 per cent, the proportion of earnings above that level will be taxed at 40 per cent.

Charlie Viola, executive chair at Viola Private Wealth, told ifa the move is “very sensible as compared to what was proposed, which was irrational and was going to be very, very hard to administer”. It also means that advisers can largely just carry on and leave client money in the super environment. “There would have been a raft of work required to model whether moving it was sensible, so now, we are likely leaving it,” he said.

The rest of this article can be found at ifa.com.au.