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Government Update: Super Tax Reforms, TEIS & R&D Exclusions

2026 Policy Update: The government has released the proposed $3M super cap draft and strict new limits on R&D incentives. Read our round-up to see how these tax changes impact your planning.

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The Government has released significant exposure draft legislation and reports covering changes to superannuation concessions, tax expenditure insights, and R&D Tax Incentive eligibility. Here is a round-up of the key developments:


1. Superannuation: Division 296 Tax

Consultation has opened on the "Better Targeted Super Concessions" measure. The draft legislation proposes a new Division 296 tax to reduce concessions for individuals with a Total Superannuation Balance (TSB) exceeding $3 million.

  • Proposed Headline Rates (from 2026–27 income year):

    • TSB up to $3m: Existing 15% concessional rate continues.

    • Earnings on TSB between $3m and $10m: Taxed at up to 30%.

    • Earnings on TSB above $10m: Taxed at up to 40%.

  • Liability: The tax is levied directly on the individual (separate from the fund). It can be paid by releasing amounts from superannuation or using personal funds.

  • Transitional Rule: For the 2026-27-year, liability is determined solely by the individual’s TSB on 30 June 2027. If the balance is $3 million or less on that date, no Division 296 tax applies for that year.


2. 2025-26 Tax Expenditures and Insights Statement (TEIS) 

The Treasurer has released the annual TEIS, which estimates government revenue forgone due to tax exemptions, deductions, and concessional rates. While not a statement of future policy, it highlights areas that may attract policy scrutiny, including:

  • Main residence exemption

  • Concessional taxation of employer superannuation contributions and superannuation earnings

  • Rental deductions

  • CGT discount for individuals and trusts

  • Work related expenses

  • Lower tax rate for small companies

  • FBT exemptions for public benevolent institutions


3. R&D Tax Incentive: Targeted Exclusions

New draft legislation proposes to exclude R&D activities related to gambling, tobacco, and nicotine products (including vaping) from the Research and Development Tax Incentive (RDTI).

  • Strict 'Sole Purpose' Test: The exclusions are broad. Exceptions will only apply to activities conducted solely for harm minimization (e.g., reducing addiction or supporting cessation).

  • Impact: Businesses in affected sectors, including software developers, must review their portfolios carefully. The strict 'sole purpose' test will disqualify activities with mixed purposes.

  • Start Date: If enacted, measures will apply to income years starting on or after 1 July 2025.



Source of information: Official publications of the Australian Government and Treasury.


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