Supporting Australians through the new era of superannuation taxation
The passage of Division 296 through the Parliament for Royal Assent on 10 March 2026 marks one of the most significant changes to Australia's superannuation system in decades.
This new reform, combined with the Government's broader focus and discussion on tax-reforms such as changes to capital gains tax, negative gearing and taxing trusts – is leading many Australians to consider alternative tax-effective investment and wealth transfer strategies.
While Division 296 will directly impact individuals with superannuation balances above $3 million, its broader implications for long-term wealth planning are already reshaping the conversations financial advisers and investors are having.
Division 296 reinforces an increasingly important principle in portfolio construction: structural diversification.
Rather than relying solely on superannuation, financial advisers and investors are seeking to diversify wealth across multiple investment structures to manage legislative risk alongside investment risk.
The scale of the change - who will be impacted?
Treasury estimates suggested that around $425 billion in superannuation balances would fall within the scope of the new tax.¹
It estimated that:
- 77,400 individuals hold superannuation balances between $3 million and $10 million¹
- 5,700 individuals hold superannuation balances above $10 million¹
- Around 50,000 SMSF members could be affected, with 13.5% potentially facing liquidity pressures²
However, the reform is not only relevant for those with earnings from superannuation balances already above the $3 million threshold.
Investors with superannuation balances between $2 million and $3 million may be asking an important question: is there a realistic chance their balances could exceed $3 million over time, indexed to the consumer price index?
For many, particularly those with long investment horizons - the answer may well be, yes.
Structural diversification gains momentum
While superannuation remains a highly tax-effective structure, alternative structures such as family trusts, companies and investment bonds are increasingly being considered alongside it as part of a broader portfolio structure.
As policy debate continues across multiple other areas of the tax system, financial advisers are increasingly focused on building client portfolios that are diversified not only across asset classes, but also across legislative frameworks.
One structure attracting renewed attention is the investment bond. Unlike superannuation, investment bonds operate outside the superannuation system and are not subject to contribution caps or balance thresholds.
Why Generation Life investment bonds?
Potential tax advantages relative to Division 296 – Generation Life Tax Optimised investment options estimated effective tax rates generally ranges as low as 10-15%.³
Estate planning outcomes without compromise - Providing control, clarity and flexibility when transferring wealth across generations.
Tax-effective wealth ownership transfer opportunities - Tax free and flexible transfer at any point, regardless of who the beneficiary is – with simplicity and certainty.
Creditor protection - Added layer of security when appropriately structured, safeguarding from creditors in the case of bankruptcy.
These features are increasingly relevant for financial advisers and investors seeking to maximise after-tax outcomes, manage government policy and legislative risks, and have added certainty for intergenerational wealth transfers.
Thinking beyond superannuation
