Unrealised Gains Tax Australia: 2025 Guide

 

Australia is preparing for a major shift in its tax system with the introduction of Division 296. From July 2025, superannuation accounts exceeding $3 million will face a 30% tax rate on all earnings, including unrealised gains. This means investors may be taxed on paper profits they have not actually received, a major departure from Australia’s long-standing principle of taxing only realised gains.

The changes are expected to impact high-value SMSFs, especially property-heavy funds such as farming land and commercial properties. Experts warn this could create liquidity problems, forcing trustees to sell assets just to pay the tax. Farmers and small business owners relying on superannuation as a retirement strategy may face serious financial strain under the new system.

While some exemptions exist, such as for judicial pensions and defined benefit schemes, most Australians with large balances will feel the impact. To manage exposure, strategies include withdrawing funds before reaching thresholds, shifting investments into trusts or company structures, and reallocating assets outside super. Critics argue the tax undermines Australia’s competitiveness, pointing to Norway’s failed experiment with similar measures. Without indexation, inflation could push many more Australians into this tax net in the coming decades.

Originally Published: https://www.starinvestment.com.au/unrealised-gains-tax-australia/