Craig Brooke
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.