Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 (8 of 2026)

Schedule 1   Better targeted superannuation concessions

Income Tax (Transitional Provisions) Act 1997

24   After Division 295

Insert:

Division 296 - Better targeted superannuation concessions

Table of Subdivisions

296-A Application of Division 296 tax rules

296-B CGT adjustments

296-C Deferred notional gains

Subdivision 2 96-A - Application of Division 296 tax rules

Table of sections

296-1 Application of Division 296 of the Income Tax Assessment Act 1997

296-1 Application of Division 296 of the Income Tax Assessment Act 1997

(1) Section 296-15 of the Income Tax Assessment Act 1997 applies to the 2026-27 income year and later income years.

(2) However, Subdivision 296-B of the Income Tax Assessment Act 1997 applies in relation to the 2026-27 income year as if:

(a) the reference in paragraph 296-40(1)(a) to just before the start of the year were omitted; and

(b) the references to your total superannuation balance reference amount in the formula in subsection 296-40(2) were references to your total superannuation balance at the end of the year; and

(c) the reference in subsection 296-45(1) to just before the start of the year were omitted; and

(d) the references to your total superannuation balance reference amount in the formula in subsection 296-45(2) were references to your total superannuation balance at the end of the year.

Note: The effect of this subsection is that, for the 2026-27 income year, whether Division 296 tax is payable by you, and the amount of that tax payable, is determined by reference to your total superannuation balance at the end of the year, rather than either just before the start or at the end of the year.

(3) You are not liable to pay Division 296 tax for the 2026-27 income year if you die on or before the last day of the year.

Subdivision 296-B - CGT adjustments

Table of sections

296-50 CGT adjustment for small superannuation funds

296-55 CGT adjustment for small superannuation funds - requirement to keep records

296-60 CGT adjustment for complying superannuation funds (other than small superannuation funds)

296-50 CGT adjustment for small superannuation funds

(1) This section applies if:

(a) a CGT event happens in relation to a CGT asset of a small superannuation fund at a time during an income year; and

(b) the CGT asset is an asset of the fund:

(i) at the end of 30 June 2026; and

(ii) at all times on and from 1 July 2026 to immediately before that CGT event; and

(c) the trustee of the fund has made a choice for the purposes of this paragraph in accordance with subsection (2).

(2) A choice for the purposes of paragraph (1)(c):

(a) is to be in the approved form; and

(b) applies to all CGT assets that are assets of the fund at the end of 30 June 2026; and

(c) can only be made during the period:

(i) starting on the day this section commences; and

(ii) ending on the due day for lodging the fund's income tax return for the 2026-27 income year; and

(d) cannot be revoked.

(3) For the purposes of working out the Division 296 fund earnings for the fund for the year under the Income Tax Assessment Act 1997, to the extent it is affected by the cost base or reduced cost base of the CGT asset:

(a) the first element of the cost base or reduced cost base is taken to be the asset's market value as at the end of 30 June 2026; and

(b) each other element of the cost base or reduced cost base is taken to have been adjusted to nil at the end of 30 June 2026 (such that any amounts that formed part of the cost base or reduced cost base on or before that day are disregarded); and

(c) in relation to the cost base:

(i) there is taken to be no indexation included in any of the elements of the cost base; and

(ii) paragraph 115-20(1)(a) (about using a cost base that has been calculated without reference to indexation) of that Act is taken to be satisfied (if applicable).

(4) This section does not affect the amount of a net capital loss for any later income year for the purposes of working out Division 296 fund earnings.

296-55 CGT adjustment for small superannuation funds - requirement to keep records

(1) A trustee of a small superannuation fund who makes a choice for the purposes of paragraph 296-50(1)(c) must keep the following records:

(a) a record of the choice;

(b) for each CGT asset to which the choice applies - records of each element of its cost base and reduced cost base as affected by subsection 296-50(3).

(2) The records must be in English, or be readily accessible and convertible into English.

(3) The trustee must retain a record mentioned in subsection (1) until the end of 5 years after it becomes certain that no CGT event (or no further CGT event) can happen such that the record could reasonably be expected to be relevant to working out the fund's Division 296 fund earnings for an income year.

Note: Section 288-25 in Schedule 1 to the Taxation Administration Act 1953 imposes an administrative penalty if a trustee does not keep or retain records as required by this section.

296-60 CGT adjustment for complying superannuation funds (other than small superannuation funds) and pooled superannuation trusts

(1) This section applies for the purposes of working out the Division 296 fund earnings for an income year (the relevant year ) under the Income Tax Assessment Act 1997 for a complying superannuation fund or pooled superannuation trust, to the extent it affects a person's relevant superannuation earnings for a superannuation interest for:

(a) the 2026-27 income year; or

(b) the 2027-28 income year; or

(c) the 2028-29 income year; or

(d) the 2029-30 income year.

(2) Any net capital gain for the relevant year, that the fund or trust has for the purposes of determining an amount used in working out the Division 296 fund earnings, is taken to be the amount of that gain, apart from this section, multiplied by a factor (which must be less than 1) prescribed by the regulations.

Note 1: The net capital gain that a complying superannuation fund has for purposes of working out the earnings is affected by subsection 296-60(3) of the Income Tax Assessment Act 1997 (which disregards certain matters).

Note 2: Deferred notional gains are disregarded for the purposes of working out Division 296 fund earnings: see Subdivision 296-C (about deferred notional gains) of this Act.

(3) This section does not apply in relation to a complying superannuation fund that is a small superannuation fund.

Subdivision 296-C - Deferred notional gains

Table of sections

296-65 Deferred notional gains to be disregarded

296-65 Deferred notional gains to be disregarded

(1) For the purposes of working out an entity's Division 296 fund earnings for an income year under subsection 296-60(1) of the Income Tax Assessment Act 1997, disregard any capital gain that, for the purposes of Division 102 of that Act, the entity is treated as having made because of subsection 294-120(5) of this Act.

Note: Subsection 294-120(5) deals with deferred notional gains for complying superannuation funds.

(2) For the purposes of working out a pooled superannuation trust's Division 296 fund earnings for an income year under subsection 296-60(4) of the Income Tax Assessment Act 1997, disregard any capital gain that, for the purposes of Division 102 of that Act, the trust is treated as having made because of subsection 294-130(5) of this Act.

Note: Subsection 294-130(5) deals with deferred notional gains for pooled superannuation trusts.