Advisers are increasingly shifting their focus from understanding the mechanics of Division 296 to managing its long-term strategic impact, according to KeyInvest.
In a new whitepaper, the firm said attention is moving beyond policy detail towards practical implementation, particularly as more clients approach the proposed $3 million superannuation balance threshold.
The paper found that a super balance of $5 million could generate more than $200,000 in additional tax over a decade under the changes, highlighting the longer-term implications for high-balance clients.
Chief executive Craig Brooke said advisers are now grappling with how to respond.
“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.
According to KeyInvest, this is prompting a shift in timing, with advisers beginning to incorporate Division 296 considerations earlier in the planning process rather than waiting until clients exceed the 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,” Brooke said.
The whitepaper also highlighted a growing focus on asset location, as the tax efficiency of superannuation becomes less consistent at higher balance levels.
According to the whitepaper, advisers now must weigh:
- The marginal tax rate applying within superannuation above certain balance levels.
- The timing and certainty of taxation.
- The interaction with estate planning objectives and intergenerational transfer.
“This does not imply a wholesale shift away from superannuation, but it does require more deliberate consideration of where incremental savings are directed once balances approach material thresholds,” it stated.
According to KeyInvest, while superannuation remains a core component of long-term wealth strategies, it is no longer being treated as the default destination for all capital. Instead, advisers are taking a more deliberate approach to determining what assets are held inside and outside the super system.
The analysis suggests that as additional tax layers apply at higher balances, the relative benefits of superannuation narrow over time, influencing greater consideration of alternative or complementary structures.
According to KeyInvest, this includes increased interest in vehicles such as investment bonds, particularly where clients are focused on tax certainty and intergenerational wealth planning outcomes.
The firm said the findings reflect broader changes in adviser behaviour as Division 296 becomes a more active consideration in client strategies, with a shift towards earlier engagement and more complex structuring decisions.
