Advisers weigh up asset location as Division 296 looms

Binaya Dahal

Journalist

23 April 2026

The looming Division 296 tax has put asset location at the centre of wealth planning, as narrowing superannuation efficiency at higher balances drives advisers to deliberately relocate clients’ capital.

The tax, which has been in the pipeline for more than three years and is set to take effect from 1 July, imposes a 15% levy on superannuation balances above $3 million that members can pay personally or draw directly from their fund.

Modelling from the member-owned mutual society KeyInvest shows a $5 million superannuation balance could, under the new regime, generate more than $200,000 in additional tax over a decade.

KeyInvest’s chief executive officer Craig Brooke said the advisers’ focus has now shifted from understanding the policy to managing its long-term impact.

“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,” Brooke said.

He said the erosion of superannuation’s tax advantages at higher balances was pushing advisers toward more deliberate decisions about where long-term capital sits.

“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,” Brooke said.

Investment bonds are gaining traction as a complementary structure, particularly as client priorities shift toward intergenerational wealth transfer and greater tax certainty over the long term alongside superannuation.

The shift is also changing when advice happens, with advisers increasingly planning around the $3 million threshold well before clients reach it.

“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,” Brooke said.

KeyInvest’s whitepaper predicts the additional tax layers applied under Division 296 will drive sustained and growing interest in structures that can work effectively alongside super rather than within it.