KeyInvest, a member-owned mutual society, has released a new whitepaper on Division 296, putting a spotlight on how adviser thinking is shifting from understanding the policy to managing its long-term impact, with modelling showing a $5 million super balance could generate more than $200,000 in additional tax over a decade.
The paper, ‘Division 296 and the end of unconstrained super’, unpacks the legislated changes and what they mean in practice, particularly for clients approaching or exceeding key balance thresholds.
KeyInvest CEO, Craig Brooke says, “The conversation has moved beyond the detail of the policy itself, and towards how advisers are responding. Most advisers now understand how Division 296 works, but the challenge is what do they do about it.”
The whitepaper points to a growing need for earlier planning, as balances trend higher and more clients move towards the $3 million threshold.
“What we’re seeing is a shift in timing, rather than waiting until a client breaches the threshold. Advisers are starting to plan for it well in advance, which changes the structure of advice.”
A key theme in the paper is the increasing importance of asset location, as marginal tax outcomes within superannuation become less consistent at higher balance levels.
“Super remains central, but it’s no longer the default destination for all long-term capital, and this is what’s leading to a more deliberate decision about what sits inside and outside of superannuation.”
The analysis also displays how the tax efficiency of superannuation narrows at higher balances, particularly once the additional tax layers apply. Over time, this is expected to influence greater interest in complementary structures that can sit alongside superannuation.
Investment bonds are increasingly part of that conversation as clients shift their priorities to intergenerational planning and tax certainty.
The whitepaper forms part of KeyInvest’s ongoing work with advisers, providing practical guidance as the impact of Division 296 becomes a more active consideration in client strategies.
To download the full whitepaper visit:
Division 296 and the end of unconstrained super
For all media queries:
Abbey Minogue, Capital Outcomes
M: 0488 006 979
About KeyInvest
KeyInvest is an APRA regulated specialist financial services provider offering investors tax effective wealth management solutions. Its humble beginnings date back to the Adelaide of 1878, when a group of thinkers came together with the single-minded vision of helping Australians to secure their future.
KeyInvest supports the unique financial needs of its customers by working with its members and their advisers to deliver tax effective wealth management solutions that aim to improve their lives and wellbeing.
Disclaimer
Insert the General Advice Warning: KeyInvest Ltd AFSL 240667 ABN 74 087 649 474 is the product issuer. All the information is general information and factual in nature only, is not intended to be financial product advice, and does not consider the investment objectives, financial situation, or needs of any individual. You should consider whether the information is appropriate, having regard to your objectives, financial situation, and needs before acting on the information. You should obtain and consider the Product Disclosure Statement and Target Market Determination for this product (available at https://keyinvest.com.au/forms-resources) before making an investment. You should also seek professional financial advice before making an investment decision.
The level of the effective tax rate estimated over the long term is based on the existing legislative tax framework that applies to investment bonds. The actual level of tax incurred by the underlying fund referable to the relevant investment bond may vary and will be dependent on that fund’s actual level of earnings and investment and transacting profile. Past performance is not indicative of future performance.
