On 17 March 2026, the Australian Treasury published the Building a Stronger and Fairer Super System Act 2026 – Draft Regulations (Draft Regulations) that supplement the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 (the Amending Act) and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 (the Imposition Act) (together, the Acts).
Draft Regulations
The Amending Act, together with the Imposition Act reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million. The Acts recently received Royal Assent on 13 March 2026. The Amending Act inserts a new Division 296 into the Income Tax Assessment Act 1997 (Cth), setting out rules for how the new Division 296 tax is to be calculated. The Amending Act also amends rules for calculating an individual’s total superannuation balance (TSB) and introduces the concept of a TSB value for each of the individual’s superannuation interests. The Amending Act provides for the Draft Regulations now published which may be made under several provisions in relation to the Division 296 tax including setting rules for how Division 296 fund earnings are to be attributed to members.
In addition:
- Schedule 1 of the Draft Regulations contains attribution rules for working out a member’s share of a fund’s Division 296 earnings, which is relevant to working out the member’s Division 296 tax liability. Schedule 1 also sets out the kinds of superannuation interests that do not use the general rule for working out earnings, but instead use a formula based on the change in TSB value. This will provide commensurate treatment for defined benefit and other prescribed interests for Division 296 tax purposes.
- Schedule 2 prescribes rules for valuing defined benefit interests and certain other retirement phase interests. These modified rules are necessary where the withdrawal benefit value (set out in the Amending Act) is inappropriate to value the interest and would understate or overstate earnings for some individuals which would undermine the intent to provide commensurate treatment of those defined benefit interests and allow some individuals to avoid any Division 296 tax being imposed.
- Schedule 3 makes adjustments to TSB values for defined benefit interests subject to a family law payment split, where that interest is not able to be split between the member spouse and non-member spouse at the time of the order or agreement.
- Schedule 4 updates some of the method assumptions in Schedules 1A and 1AA of the Income Tax Assessment (1997 Act) Amendment (Building a Stronger and Fairer Super System and Other Measures) Regulations 2026 and Income Tax Assessment (1997 Act) Regulations 2021, which are used to value notional taxed contributions and defined-benefit contributions. Schedule 4 also lists State higher level office holders whose earnings from interests in a constitutionally protected fund are not subject to Division 296 tax.
Letter from Australian Government Actuary
The Treasury has also published a letter from the Australian Government Actuary setting out the recommended reduction factor for calculating earnings for defined benefit and other prescribed interests.
Next steps
The deadline for comments on the Draft Regulations is 7 April 2026.