Income Tax Assessment (1997 Act) Amendment (Building a Stronger and Fairer Super System and Other Measures) Regulations 2026 (F2026L00726)

Schedule 1   Better targeted superannuation concessions

Income Tax Assessment (1997 Act) Regulations 2021

2   After Division 295

Insert:

Division 296 - Better targeted superannuation concessions

Subdivision 296-B - Better targeted superannuation concessions

296-55.01 Meaning of Division 296 excluded interest - current and former constitutionally protected State higher level office holders

For the purposes of item 1 of the table in subsection 296-55(3) of the Act, an individual who is or has ever been a State higher level office holder is declared.

296-55.02 Amount taken to be nil - pensions payable under section 123 of the Federal Circuit and Family Court of Australia Act 2021

For the purposes of paragraph 296-55(2)(c) of the Act, your relevant superannuation earnings for a superannuation interest that supports an income stream that is a pension payable under section 123 of the Federal Circuit and Family Court of Australia Act 2021 are prescribed.

Note: An amount prescribed for the purposes of paragraph 296-55(2)(c) of the Act is taken to be nil, for the purposes of working out the amount of your total superannuation earnings for an income year.

296-60.01 CGT adjustment - prescribed factors for subsection 296-60(2) of the Income Tax (Transitional Provisions) Act 1997

For the purposes of subsection 296-60(2) of the Income Tax (Transitional Provisions) Act 1997, the following factors are prescribed:

(a) for the 2026-27 income year - 0.2;

(b) for the 2027-28 income year - 0.4;

(c) for the 2028-29 income year - 0.6;

(d) for the 2029-30 income year - 0.8.

296-65.01 Relevant superannuation earnings - prescribed superannuation interests

For the purposes of paragraph 296-65(2)(b) of the Act, the following superannuation interests are prescribed:

(a) an interest supporting a superannuation income stream, if there is no account balance attributable to the beneficiary in relation to the income stream;

(b) an interest supporting a military invalidity income stream;

(c) an interest in the superannuation fund mentioned in paragraph 29(1)(a) of the State Superannuation Act 2000 (WA);

(d) an interest in a fund established by a provision of the Southern State Superannuation Act 2009 (SA), other than paragraph 30(2)(h) of that Act;

(e) an interest that you are treated as having under subsection 307-230(3) of the Act because you are a non-member spouse in relation to another superannuation interest.

296-65.02 Relevant superannuation earnings - determination of amount attributable to superannuation interest

For the purposes of subsection 296-65(3) of the Act, the amount attributable to a superannuation interest for an income year must be determined with regard to the following matters:

(a) the characteristics of the interest;

(b) the period in the year for which the interest existed;

(c) earnings associated with the interest:

(i) including amounts of earnings that are directed to reserves; and

(ii) regardless of whether or not the earnings are reflected in an account balance associated with the interest;

(d) changes in the value of the interest;

(e) the investment options that the interest is invested in, and any changes to the investment options;

(f) if:

(i) you die in the income year; and

(ii) because of your death, another person becomes a retirement phase recipient of a superannuation income stream supported by the interest;

the periods in the year before and after the other person becomes a retirement phase recipient as mentioned in subparagraph (ii);

(g) if:

(i) you die in the income year; and

(ii) because of subsection 296-70.04(2), earnings for any period after the end of the income year are to be attributed in accordance with this section;

the period mentioned in subparagraph (ii) of this paragraph;

(h) the principle that, if the superannuation interest is in a class of interests in the superannuation fund, approved deposit fund or RSA that is identifiable with regard to:

(i) the assets to which interests in the class relate; and

(ii) the level of risk associated with interests in the class;

amounts should be attributed to the interest in a way that is consistent with the way amounts are attributed to other interests in the same class;

(i) the principle that amounts should be attributed in a way that is fair to all members and other beneficiaries of the superannuation fund, approved deposit fund or RSA;

(j) the principle that the amount should not include earnings attributable to superannuation interests to which subsection 296-65(3) does not apply.

Note: An amount determined in accordance with this section may be negative.

296-65.03 Relevant superannuation earnings - interests in small superannuation funds

(1) For the purposes of subsection 296-65(5) of the Act, the amount attributable to a superannuation interest (the relevant interest ) in a small superannuation fund for your year must be determined in accordance with this section for an income year (the fund year ) of the fund.

Note: If you die during your year, amounts from multiple fund years may be attributable to the relevant interest for your year (see subsection 296-70.04(2)).

(2) The amount is to be worked out in accordance with the following formula:

where:

average sum of the total superannuation balance values of non-excluded superannuation interests means the average for the fund year of the sum of the total superannuation balance values of all superannuation interests in the fund, other than superannuation interests to which subsection 296-65(2) of the Act applies.

average total superannuation balance value of the relevant interest means the average for the fund year of the total superannuation balance value of the relevant interest.

average sum of the value of all pension reserves means the average for the fund year of the sum of the values of all pension reserves of the fund.

(3) The amount worked out under subsection (2) is taken to be nil if the sum of the following amounts is nil:

(a) the average sum of the total superannuation balance values of non-excluded superannuation interests;

(b) the average sum of the value of all pension reserves.

(4) For the purposes of subsection (2):

(a) if a superannuation interest in the fund exists for only part of the fund year, the interest is taken to have a total superannuation balance value of nil for any period in the fund year during which the interest does not exist; and

(b) if a pension reserve of the fund exists for only part of the fund year, the pension reserve is taken to have a value of nil for any period in the fund year during which the pension reserve does not exist.

(5) For the purposes of working out the average total superannuation balance value of the relevant interest, if:

(a) you die; and

(b) because of your death, another person becomes a retirement phase recipient of a superannuation income stream supported by the relevant interest;

the total superannuation balance value of the relevant interest is taken to be nil for any time after the relevant interest begins to support the income stream.

Note: The total superannuation balance value of the relevant interest is still taken into account in working out the average sum of the total superannuation balance values of all of the superannuation interests in the fund. This may happen if, for example, after your death the relevant interest continues to be an interest in the fund because it supports a superannuation income stream as mentioned in paragraph (5)(b).

(6) The amount attributable to the superannuation interest must be determined wholly by reference to an actuary's certificate, unless either:

(a) the Division 296 fund earnings for the fund for the fund year are nil; or

(b) all of the following apply:

(i) one individual (the sole member ) is a member of the fund for all or part of the fund year;

(ii) no other individual is a member of the fund at any time in the fund year;

(iii) the sole member does not, at any time in the fund year, hold a superannuation interest in the fund that subsection 296-65(5) of the Act does not apply to.

296-70.01 Relevant superannuation earnings - prescribed factor

For the purposes of the definition of prescribed factor in subsection 296-70(1) of the Act, the value is 0.825.

296-70.02 Relevant superannuation earnings - your contributions total

(1) For the purposes of the definition of your contributions total in subsection 296-70(1) of the Act, the amount for an income year for a superannuation interest (the relevant interest ) mentioned in subsection 296-65(2) of the Act is the total of the following amounts:

(a) if the relevant interest is, or includes, a defined benefit interest in a superannuation fund - your non-retirement-phase member contributions amount for the relevant interest for the year (see subsection (2));

(b) the amount of your defined benefit contributions for the year in respect of the relevant interest;

(c) if the relevant interest is an interest in a constitutionally protected fund, and is not a defined benefit interest - contributions made to the fund in respect of you, and in respect of the relevant interest, for the year;

(d) the amount of a roll-over superannuation benefit that is paid, rolled over, transferred, allotted or credited into the relevant interest during the year;

(e) if the relevant interest is a superannuation interest that, under subsection 307-230(3) of the Act, you begin to be treated as having at any time in the year - the total superannuation balance value of the interest at that time;

(f) the total superannuation balance value of the relevant interest at a particular time in the year, if:

(i) at that time, you start to receive a death benefit income stream because of the death of another person; and

(ii) the relevant interest supports the death benefit income stream;

(g) the total superannuation balance value of the relevant interest at a particular time in the year, if:

(i) at that time, a pension under section 16 of the Australian Defence Force Cover Act 2015 begins to be payable to you; and

(ii) the relevant interest supports the pension;

(h) an amount that becomes included in the relevant interest during the year because of an amount that:

(i) is paid into the relevant interest under an insurance policy; and

(ii) is payable because of the death or total and permanent disability of the insured person or because a terminal medical condition exists in relation to the person;

(i) if you die during the year - an amount that becomes included in the relevant interest after the end of the year because of an amount that:

(i) is paid into the relevant interest, under an insurance policy, after the end of the year; and

(ii) is payable because of your death, or because of your total and permanent disability before your death, or because a terminal medical condition existed in relation to you before your death;

(j) the amount by which the total superannuation balance value of the relevant interest increases during the year as a result of any of the following matters (the relevant matter ):

(i) your death;

(ii) your permanent incapacity (within the meaning of the SIS Act);

(iii) a terminal medical condition that exists in relation to you;

unless, at any time (whether during, before or after the year), an amount is paid into the relevant interest under an insurance policy, as mentioned in subparagraph (h)(i) or (i)(i), because of the relevant matter;

(k) the amount worked out under subsection (3), if an amount is transferred into the relevant interest from a foreign superannuation fund for your benefit during the year;

(l) if the relevant interest supports a deferred superannuation income stream:

(i) that paragraph 307-70.02(1)(c) applies to; and

(ii) that is neither a pooled investment pension nor a pooled investment annuity;

any amount of consideration paid in the year for the relevant interest for the income stream;

(m) the amount by which the total superannuation balance value of the relevant interest increases during the year because of any of the following:

(i) a payment for compensation for a loss suffered as a result of fraud or dishonesty;

(ii) a remediation payment;

(iii) a military invalidity income stream becomes payable to you;

(iv) if the relevant interest supports a military invalidity income stream that is payable to you - the amount that is payable increases because you are reclassified in respect of your incapacity;

(n) an amount allocated to the relevant interest for the year:

(i) in accordance with the conditions specified in section 291-25.01 or 292-90.01; or

(ii) where any of subsections 292-90.02(2) to (6) apply in relation to the allocation.

Member contributions amount - defined benefit interest not in the retirement phase

(2) For the purposes of paragraph (1)(a), your non-retirement-phase member contributions amount for the relevant interest for the year is the amount of member contributions:

(a) paid by or on behalf of you in respect of the relevant interest at any time during the year, other than a time when the relevant interest was in the retirement phase; and

(b) which are not assessable income of the superannuation fund mentioned in that paragraph;

but excluding any amounts which are not assessable income of the fund because of:

(c) item 5.3 of the table in section 50-25 of the Act; or

(d) a choice made under section 295-180 of the Act.

Lump sums transferred from foreign superannuation funds

(3) For the purposes of paragraph (1)(k):

(a) if you do not make a choice under subsection 305-80(2) of the Act that applies to any of your applicable fund earnings - the amount is the amount transferred into the relevant interest; or

(b) if you make a choice under subsection 305-80(2) of the Act that applies to all or part of your applicable fund earnings - the amount is to be worked out in accordance with the following formula:

Avoidance of double-counting

(4) To avoid doubt, do not include an amount, or part of an amount, in the total mentioned in subsection (1) more than once, even if more than one provision of that subsection applies to the amount or part of the amount.

296-70.03 Relevant superannuation earnings - your withdrawals total

(1) For the purposes of the definition of your withdrawals total in subsection 296-70(1) of the Act, the amount for an income year for a superannuation interest (the relevant interest ) that is mentioned in subsection 296-65(2) of the Act is the total of the following amounts:

(a) the amount of a superannuation benefit paid, rolled over, transferred or allotted from the relevant interest during the year (subject to subsections (2) to (5) of this section);

(b) if:

(i) the relevant interest becomes subject to a payment split at any time in the year; and

(ii) at that time, the non-member spouse in relation to the interest is treated, under subsection 307-230(3) of the Act, as having a superannuation interest (the non-member spouse's interest ) because of the payment split;

the total superannuation balance value of the non-member spouse's interest at that time;

(c) if:

(i) you die during the year; and

(ii) at any time in the year, or in any later income year, another person starts to receive a death benefit income stream, that is supported by the relevant interest, because of your death;

the total superannuation balance value of the relevant interest at that time;

(d) if:

(i) you die during the year; and

(ii) at any time in the year, or in any later income year, another person receives a superannuation death benefit from the relevant interest because of your death; and

(iii) the superannuation death benefit is not paid from a death benefit income stream that is supported by the relevant interest;

the amount of the superannuation death benefit;

(e) the amount by which the total superannuation balance value of the relevant interest decreases during the year because of any of the following:

(i) a military invalidity income stream that was payable to you ceases to be payable to you;

(ii) if the relevant interest supports a military invalidity income stream that is payable to you - the amount that is payable decreases because you are reclassified in respect of your incapacity.

(2) For the purposes of paragraph (1)(a), treat a superannuation benefit as being paid from the relevant interest if:

(a) the relevant interest is an interest that you are treated, under subsection 307-230(3) of the Act, as having because another superannuation interest is subject to a payment split; and

(b) the superannuation benefit is paid to you because of the payment split.

(3) For the purposes of paragraph (1)(a), if:

(a) a superannuation benefit is paid because the relevant interest is subject to a payment split; and

(b) when the benefit is paid, the non-member spouse in relation to the relevant interest is treated, under subsection 307-230(3) of the Act, as having a superannuation interest because the relevant interest is subject to the payment split;

the amount paid to the non-member spouse is to be disregarded.

(4) For the purposes of paragraph (1)(a), disregard the following amounts:

(a) an amount of superannuation death benefits paid to another person from the relevant interest;

(b) an amount paid to another person from a death benefit income stream supported by the relevant interest.

(5) For the purposes of paragraph (1)(a), disregard an amount:

(a) that is paid from a military invalidity income stream; and

(b) that is paid in arrears because of a decision (however described) about your incapacity (however described) (including a decision about your classification in respect of incapacity), where the decision applies to a period before the decision is made; and

(c) where the amount, or a corresponding amount, is not included in your contributions total for the year or any previous income year under section 296-70.02 for the purposes of subsection 296-70(1) of the Act.

Exclusion - fraud or dishonesty

(6) Do not include in the total mentioned in subsection (1) an amount in relation to which all of the following paragraphs apply:

(a) the amount arose, in circumstances mentioned in one or more of the paragraphs of subsection (1), as a result of fraud or dishonesty;

(b) an individual has been convicted of an offence involving that fraud or dishonesty;

(c) you notify the Commissioner in the approved form of the matters mentioned in paragraphs (a) and (b) of this subsection.

Note: For approved form , see subsection 995-1(1) of the Act.

Avoidance of double-counting

(7) To avoid doubt, do not include an amount, or part of an amount, in the total mentioned in subsection (1) more than once, even if more than one provision of that subsection applies to the amount or part of the amount.

296-70.04 Modification of sections 296-65 and 296-70 of the Act in relation to deceased individual

(1) For the purposes of subsection 296-75(1) of the Act, this section prescribes modifications of sections 296-65 and 296-70 of the Act that apply to an individual (the deceased individual ) who dies during an income year (the relevant year ) of the deceased individual.

(2) If subsection 296-65(1) of the Act applies in relation to a superannuation interest of the deceased individual for the relevant year, then, for the purposes of working out the deceased individual's relevant superannuation earnings for the interest for the relevant year, paragraph (b) of that subsection is taken to refer to:

(a) the income year, of the entity mentioned in paragraph (a) of that subsection, that is the same period as the relevant year (or that, of the income years of the entity, covers the most of the relevant year); and

(b) any later income year of that entity that includes any of the period between the death of the deceased individual and the earlier of the following:

(i) the time when all superannuation death benefits have been paid or distributed from the interest;

(ii) the time when, because of the deceased individual's death, another person starts to receive a death benefit income stream.

(3) If section 296-70 of the Act applies in relation to a superannuation interest of the deceased individual for the relevant year, then, for the purposes of applying the formula in subsection 296-70(1) of the Act to work out the deceased individual's relevant superannuation earnings for the relevant year for the interest, the total superannuation balance value of the interest at the end of the relevant year is taken to be nil.

Note 1: Certain contributions and withdrawals that occur after the relevant year are counted in the relevant year for the purposes of subsection 296-70(1) of the Act (see in particular paragraphs 296-70.02(1)(i) and 296-70.03(1)(c) and (d)).

Note 2: If another person receives a superannuation death benefit from the interest, or a death benefit income stream supported by the interest, subsection (3) does not affect the total superannuation balance value of the interest for the purposes of working out the other person's relevant superannuation earnings.