Overview

The ATO has published guidance on the operation of the new Division 296 tax imposed on earnings on balances over $3m from 1 July 2026.

The guidance includes information on how Div 296 tax is calculated and collected, how super earnings are calculated and Div 296 tax for defined benefit interests. 

Two bills* implementing key tax reform measures announced in the Federal Budget, passed both houses yesterday and awaits royal assent.

Federal Budget announcements included in the bills: 

• Replacement of 50% CGT discount -  indexed cost base method will apply to capital gains accrued from 1 July 2027

• Introduction of a minimum 30% tax rate - will apply to realised capital gains accrued from 1 July 2027

• Negative gearing residential property - restricted to new-build properties from 1 July 2027

• Working Australians Tax Offset - commences 1 July 2027

• $1,000 standard deduction - applies for work related expenses from 1 July 2026

Additional amendments to the bills include: 

• Small business CGT concessions -  turnover threshold for the 50% active asset reduction will increase from $2 million to $10 million from 1 July 2027

• Prohibition on Limited Recourse Borrowing Arrangements (LRBA) - SMSFs cannot enter new LRBA arrangements in real property, except where the asset qualifies as business real property (commencing 45 days after royal assent)

• Deductible gifts and donations - can reduce capital gains subject to the minimum 30% tax from 1 July 2027

• Income support payments - list of payments that qualify for an exemption from the minimum 30% CGT tax rate from 1 July 2027

Further amendments

In a Treasury media release, the Government indicated it will continue to implement further tranches of legislation as they roll out the full tax reform package in the months ahead.

Media reports indicate the Government will implement measures to prevent jointly owned investment properties, that transfer to a co-owner due to death or divorce, from losing access to the 50% CGT discount on gains accrued before 1 July 2027 and the ability for established properties to negatively gear (if purchased before Budget night).

Further consultation

The Government has indicated that further legislation will be introduced later this year following consultation on:  

• Discretionary trusts - implementation of the minimum 30% tax   

o Note, previously announced that the minimum tax will not apply to discretionary testamentary trusts provided they are established for genuine testamentary purposes.

• Definition of new builds - eligible to choose a 50% discount on gains accrued from 1 July 2027, and eligible to access negative gearing for properties purchased after 12 May 2026

• Types of exempt housing investment - exempt from the limits on negative gearing and eligible for the 50% CGT discount.  Includes affordable housing.

For more information, see the FirstTech Federal Budget FAQs which covers the main questions FirstTech has received regarding the tax reforms.

* Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026

The Income Tax Assessment (1997 Act) Amendment (Building a Stronger and Fairer Super System and Other Measures) Regulations 2026 were registered on 18 June 2026.

The Regulations prescribe certain values, calculations, and methods so that all superannuation interests are properly assessed for the purposes of the Division 296 tax legislation that will commence from 1 July 2026.

Notably, the Regulations clarify attribution rules for working out a member’s share of a fund's Division 296 earnings and prescribe rules for valuing defined benefit interests, which has been much anticipated.