Following extensive debate and consultation, the Government announced significant revisions to the regime on 13 October 2025, including:
- Removal of the taxation on unrealised capital gains
- Agreement to index the $3 million member balance threshold for the 30% tax rate
- Introduction of a new $10 million threshold, above which earnings will be taxed at 40%
- Deferral of the effective date to 1 July 2026
At Alsaker, we broadly welcome these refinements.
The earlier proposal to tax unrealised gains may have simplified the regulatory mechanics, but it fundamentally misunderstood the practical impact on funds with moderate to high levels of illiquid assets — such as property, private company shares, and start-up investments. For funds whose principal asset was a related-party business property or early-stage venture capital, the consequences could have extended well beyond the fund itself, reverberating across family enterprises and innovation investment.
Equally, the previously proposed commencement date of 1 July 2025 had already passed, leaving many trustees in limbo — uncertain whether to restructure or hold steady. While many advisers sensibly urged caution until the legislation was finalised, Alsaker has observed pre-emptive divestments of business and property interests that, in hindsight, may have been unnecessary or at least premature.
The revised framework goes a long way toward addressing these concerns.
However, it’s notable that during the press conference, the Treasurer acknowledged continued calls for an overall cap on superannuation balances. Although the Government declined to introduce such a cap, the new 40% rate for balances above $10 million appears to be a deliberate move to make superannuation less attractive at very high levels. In effect, this positions super funds as less strategic for ultra-high-balance clients, when compared with private investment companies that operate at a consistent 30% tax rate.
In our view, these developments mark the beginning of a broader structural shift in how premium private clients approach investment asset structuring. The deferral to 1 July 2026 provides valuable time to plan and adjust — but for funds with illiquid asset holdings, thoughtful forward planning remains essential.
