Government Updates Impacting Tax, R&D Incentives and Superannuation (2026)
Australian tax legislation and financial regulations continue to evolve, affecting individuals, businesses, and investors. Recent government announcements introduce important changes to superannuation taxation, R&D tax incentives, trust administration, and tax expenditure policies.
Understanding these updates is essential for individuals and businesses to ensure tax compliance and effective financial planning. Below is a summary of the latest government updates that may impact Australian taxpayers from 2025 onwards.
Division 296: New Tax on High Superannuation Balances
The Australian Government has released exposure draft legislation for the Better Targeted Super Concessions measure, which introduces a new tax rule known as Division 296.
This measure aims to reduce tax concessions for individuals with superannuation balances exceeding $3 million.
Key Proposed Changes
From the 2026–27 income year, higher tax rates may apply to superannuation earnings linked to large balances:
- Up to 30% tax on earnings from super balances between $3 million and $10 million
- Up to 40% tax on earnings from super balances exceeding $10 million
The Division 296 tax will be applied directly to individuals, separate from the tax already paid by superannuation funds.
Individuals may choose to pay this tax:
- Using funds withdrawn from their superannuation account, or
- Using funds held outside of super.
Threshold Indexation
The proposed $3 million and $10 million thresholds will be indexed to CPI, ensuring they increase over time in line with inflation and remain aligned with the transfer balance cap framework.
Transitional Arrangements for Superannuation Assets
The proposed legislation includes transitional rules for assets already held within super funds before the measure begins.
Two methods are proposed for calculating transitional capital gains tax (CGT) adjustments:
- Cost base adjustment method – primarily for small superannuation funds
- Factor method – for other complying super funds
A special transitional rule will apply for the 2026–27 income year.
Division 296 tax will be assessed based on an individual’s Total Superannuation Balance (TSB) as at 30 June 2027.
This means individuals with balances below $3 million at that date will not be subject to Division 296 tax, even if their balance temporarily exceeded $3 million earlier.
Further regulations are expected to clarify:
- Exclusions from total superannuation earnings
- Attribution of earnings to specific super interests
- Valuation rules for certain superannuation interests
- CGT transition calculations for large funds
2025–26 Tax Expenditures and Insights Statement
The government also released the 2025–26 Tax Expenditures and Insights Statement (TEIS).
This report estimates revenue forgone due to tax concessions, deductions, and offsets within the Australian tax system. It also highlights areas that may attract policy attention in the future.
Some of the largest tax expenditures identified include:
- Main residence capital gains tax exemption
- Concessional taxation of superannuation contributions and earnings
- Rental property deductions
- Capital gains tax discount for individuals and trusts
- Work-related expense deductions
- Lower tax rates for small companies
- Fringe Benefits Tax (FBT) exemptions for public benevolent institutions
These areas may become key focus points for future tax reforms or policy adjustments.
Targeted Exclusions from the R&D Tax Incentive
The government has also proposed changes to the Research and Development Tax Incentive (RDTI) program.
The draft legislation aims to exclude certain industries from claiming R&D tax benefits, including:
- Tobacco-related research
- Gambling-related technologies
- Nicotine product development, including vaping products
These exclusions would apply to both direct and supporting R&D activities.
Exception for Harm Reduction
An exception may apply where research activities are specifically aimed at reducing harm related to tobacco or nicotine products.
However, due to the strict “sole purpose” requirement, R&D projects with mixed objectives may not qualify for the tax incentive.
If passed, these changes would apply to income years starting from 1 July 2025.
Businesses involved in technology, software development, or product research should review their R&D activities carefully to ensure eligibility.
Modernising Trust Administration Systems
The government has also proposed reforms to trust administration reporting requirements under the Treasury Laws Amendment Bill 2025.
These changes aim to simplify how closely held trusts report beneficiary Tax File Numbers (TFNs) to the Australian Taxation Office (ATO).
Key Proposed Changes
Under the draft legislation:
- Trustees will report beneficiary TFNs when lodging the trust tax return, instead of quarterly reporting.
- The rule applies where a beneficiary has provided their TFN and receives a share of trust income.
Additionally, the ATO Commissioner may notify trustees if:
- A quoted TFN is incorrect
- A TFN has been withdrawn or cancelled
- Information provided does not match ATO records
Both the trustee and beneficiary will be notified if a valid TFN has not been provided.
- These changes aim to:
- Improve tax data matching
- Support pre-filled tax returns for individuals
- Ensure accurate tax assessments
The new TFN reporting system may apply to income years starting from 1 July 2026.
Transfer Balance Cap Increase
Following the release of December 2025 CPI figures, the general Transfer Balance Cap (TBC) will increase.
From 1 July 2026, the cap will rise from:
- $2.0 million → $2.1 million
This increase may provide new tax-effective retirement planning opportunities for some Australians.
Retirement Income Stream Opportunities
Individuals who begin a retirement-phase income stream on or after 1 July 2026 will have access to the full $2.1 million transfer balance cap.
Because of this increase, some individuals may benefit from delaying the commencement of retirement income streams until July 2026.
Careful retirement planning with a qualified accountant or financial advisor can help maximise tax efficiency.
Final Thoughts
The latest government updates introduce significant changes across superannuation taxation, trust administration, R&D tax incentives, and retirement planning.
Staying informed about these changes allows individuals and businesses to:
- Plan ahead for tax changes
- Maintain compliance with new regulations
- Identify potential tax planning opportunities
Working with an experienced accountant ensures you understand how these updates may affect your financial strategy and tax obligations.
Contact Titan Tax for Expert Tax Advice
If you need guidance on superannuation tax rules, R&D tax incentives, trust taxation, or retirement planning, the team at Titan Tax is here to help.
Titan Tax – Professional Accounting Services
🌐 Website: https://titantax.com.au/
📞 Phone: 0457 696 620
📧 Email: info@titantax.com.au
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Our experienced accountants help individuals and businesses stay compliant with Australian tax laws while maximising financial opportunities.
Contact Titan Tax today for professional tax advice tailored to your needs.
