Our submission on Division 296 tax draft legislation

On 16 January 2026, the Institute of Financial Professionals Australia (IFPA) lodged its submission on the Better Targeted Superannuation Concessions (ie, Division 296 tax) exposure draft legislation. In its submission, IFPA argues the proposal in its current form still has…

On 16 January 2026, the Institute of Financial Professionals Australia (IFPA) lodged its submission on the Better Targeted Superannuation Concessions (ie, Division 296 tax) exposure draft legislation.

In its submission, IFPA argues the proposal in its current form still has flaws that will produce inequitable and unworkable outcomes if legislated.

Key concerns raised in the submission include:

• Only closing total superannuation balance (TSB) should be used for Division 296 purposes. The “higher of two balances” approach produces unfair outcomes by taxing notional balances rather than actual circumstance and must be adjusted to account for losses, insurance proceeds, excess contributions and other events outside a member’s control.


• Death-related outcomes are unworkable and inequitable. The inclusion of members in the year they die can impose tax after assets have been distributed and shift liabilities to estates and beneficiaries. A clear exemption where a member dies during an income year is required.


• The cost base reset is fundamentally flawed. The all-or-nothing election, lack of portability, exclusion of indirect assets and failure to properly exclude pre-30 June 2026 gains undermine the policy intent and risk taxing historical gains, particularly for larger balances.


• Administrative settings will undermine implementation. Variable SMSF tax return due dates may impact cost base election timing, along with misaligned payment and release authority timeframes, and unresolved earnings attribution issues all create unnecessary compliance risk and uncertainty, requiring legislative amendment and clear guidance.

Further details regarding these issues and our recommended amendments can be found in our submission and media release.