Imagine this: you own an investment property in your super fund. It goes up in value, but you haven’t sold it. You haven’t made a cent. Yet, under the government’s new proposal—you could be taxed on it anyway.
Sounds like fiction?
It’s not. It’s called Division 296, and it could soon become law.
The Albanese Government wants to introduce a 30% tax on earnings from the portion of your super balance above $3 million—but not just on actual income or sold assets. They want to tax unrealised capital gains. That means taxing paper profits. Gains you haven’t cashed in.
At first, this might sound like a tax targeting the ultra-wealthy. But here’s the truth: this change sets a dangerous precedent, and it could eventually touch any Australian who’s built wealth inside super—especially property investors using SMSFs.
Let’s break it down.
Currently, superannuation earnings are taxed at 15%. The government wants to double that to 30% for balances above $3 million. That’s already a big change—but here’s the kicker:
You’d be taxed not just on income (like rent or dividends), but also on the rising value of your property, even if you haven’t sold it.
If your property goes up in value by $300,000 in a year, that’s considered income for tax purposes—even if no money hits your bank account.
And if the property value drops the year after? You don’t get a refund—just a tax credit.
Most investors don’t have cash lying around to pay taxes on paper gains. Your wealth is tied up in real estate—appreciating, yes, but not liquid.
So how do you pay the tax?
All three scenarios damage your long-term retirement strategy.
If the government starts taxing unrealised gains inside super, what stops them from doing the same for investment properties held outside super?
This is a dangerous shift from taxing realised income to taxing theoretical value.
The $3 million cap won’t be indexed to inflation.
With Sydney property values climbing at 4–6% annually, and many SMSFs owning 2–3 properties, it’s not hard to breach that cap over time.
Today it affects 80,000 Australians. In 10 years, it could affect 10x that number—especially middle-class professionals with investment properties.
Super was meant to be a secure, long-term vehicle with clear rules.
This proposal tells investors:
It creates uncertainty—and when investors feel uncertainty, they stop investing.
Let’s say you own:
Under this tax, you could be slugged $12,000 to $15,000 per year in extra tax—on unrealised gains.
That’s money you haven’t received. And if you don’t sell, you may have to borrow or pull from other assets, which defeats the entire purpose of super.
Unlike shares, real estate isn’t revalued daily.
Expect valuation disputes, inconsistent assessments, and loads of red tape.
Wrong.
Yes, the headline number is $3 million. But that includes capital growth, not just contributions.
Plenty of SMSFs in Sydney—holding long-term investment properties—are either at or approaching that cap.
And with no indexation, that $3M threshold shrinks in real terms every year.
If you own a duplex in the east or a few well-performing commercial assets, you may already be over the line—even without feeling “rich.”
Here’s how to get ahead of this:
This is not just a “tax on the wealthy.”
It’s a seismic shift in the philosophy of Australian tax—and real estate investors need to pay attention.
If we start taxing unrealised gains, the flow-on effects to property investment will be:
So ask yourself:
If the rules can change like this in super—where else could they change next?
Speak with your advisor, review your super structures, and don’t ignore this as someone else’s problem.
Because in 5 years—it may be yours.
