The sweeping changes announced to the federal government's proposed Division 296 legislation, affecting high-balance superannuation members, have thankfully addressed some of the most contentious aspects of the original proposal.

Login or signup to continue reading

The most egregious parts of the original plan included the intention to tax unrealised gains and the unindexed $3 million limit threshold, which meant bracket creep and inflation would affect more people over time.

And while the financial services industry is breathing a collective sigh of relief, knowing the government has clearly listened to its concerns, superannuation members and their advisers now face a new set of considerations as they map out retirement and investment goals.

Naturally, as more details are released and the full picture of the final legislation becomes clear, we'll be in a stronger position to provide much more strategic and tailored guidance.

READ MORE: Treasurer Jim Chalmers announces super tax backdown

But for now, I want to focus on understanding the broad contours of the changes and their likely implications.

The Division 296 tax will now apply only to realised earnings attributable to the member, not to unrealised gains.

This is a significant improvement, as it removes the liquidity and portfolio management issues associated with taxing paper gains.

New tiered thresholds have also been introduced.

This means for superannuation balances between $3 million and $10 million,........

© The Examiner