Division 296 Tax and 2026 CGT Changes: Should You Still Withdraw Money From Super?
A funny thing happened right before 1 July. Just as plenty of high-balance investors were weighing up whether to pull money out of super ahead of Division 296, the Government shifted the capital gains tax rules for many of the alternatives outside super.
That doesn’t mean nobody should act. It does mean the old “take it out and invest personally” argument isn’t quite the lay-down misère it may have looked like a few months ago.
The short version? The 2026 capital gains tax changes make it less attractive to withdraw money from super in order to avoid Division 296. Not impossible. Just less obvious. And, honestly, that’s where good advice starts to matter.
How to compare super and personal ownership.
For many investors, the proposed reform replaces the usual 50% CGT discount with an inflation-indexed cost base for assets held longer than 12 months. In simple terms, part of the gain that merely reflects inflation may no longer be taxed in the same way.
That matters because most alternatives to super, like personal ownership and family trust structures, sit right in the firing line. Super funds, on the other hand, aren’t directly affected by this particular change, so the decision isn’t just about Division 296 anymore. It’s about how the asset behaves under each regime.
The real question isn’t “Is super better than personal ownership?” It’s “Which structure leaves you better off after tax for this asset, over this time frame, with your goals?”
A better way to compare: the comparison rate.
One practical way to explain the Division 296 tax and 2026 CGT changes to clients is to use a comparison rate. It’s not a real tax rate. It’s simply the tax paid on sale expressed as a percentage of the whole economic gain, so you can compare super and non-super options on the same footing.
That little tweak helps because the personal tax side may now tax a smaller gain, while super still taxes a conventionally calculated gain with its own discount rules. Apples and oranges become, well, at least apples and pears from the same fruit bowl.
| Scenario | What tends to happen | Planning read-through |
|---|---|---|
| Low asset growth, higher inflation | The indexed cost base can absorb much of the gain outside super. | Personal ownership may look more attractive than it did under old CGT rules. |
| Moderate growth, moderate inflation | The benefit of indexation starts to narrow as real gains rise. | The decision becomes finely balanced and needs modelling. |
| High growth assets | More of the gain remains taxable outside super, even after indexation. | Super can still stack up well, even with Division 296 affecting part of earnings. |
Why low-growth assets can change the story.
If an asset only creeps ahead of inflation, the taxable gain outside super can be surprisingly small. That means the actual tax bill may feel much lower than the top marginal rate suggests. You’re still taxed at a high rate, yes, but on a much smaller slice of the gain.
That’s why low-growth assets can make personal ownership look more compelling than it did before. Think of defensive assets, slow-burning investments, or holdings where returns are expected to be steady rather than spectacular.
Why stronger growth can still favour super.
Once asset growth starts pulling well ahead of inflation, the indexation benefit gets diluted. At that point, the tax cost outside super starts to feel heavier again, and super may still come out ahead even when Division 296 lifts the effective tax drag on balances above the relevant threshold.
That’s the bit that catches people. They hear “CGT relief outside super” and assume the answer is obvious. Often it’s not. A high-growth asset can push the analysis right back toward staying invested in super.
Examples from clients like ours.
Example 1: A Melbourne business owner in their late 50s had a large super balance and a portfolio of mature, lower-growth investments. On paper, withdrawing part of super to avoid future Division 296 imposts sounded sensible. Once we factored in the new CGT treatment outside super, the benefit narrowed sharply. For those assets, the move just wasn’t as compelling.
Example 2: Another client family held higher-growth assets and expected strong long-term appreciation. In that case, personal ownership still carried a meaningful future tax cost, even after allowing for indexation. The numbers suggested that keeping more capital in super remained defensible, provided the estate and liquidity settings were right.
Example 3: For a couple balancing retirement timing, adult children, and legacy goals, the tax answer wasn’t even the whole answer. Cash flow, control, creditor protection, and what they wanted the wealth to do over the next decade mattered just as much. That’s often the real story, isn’t it?
One super point people miss.
With Division 296, people often talk as though every extra dollar in super is simply taxed at one flat “bad” rate. Real life is messier. Earnings and capital gains inside super can effectively be spread across different slices, with different tax outcomes applying across the balance.
Even so, a marginal-rate style comparison can still be useful when you’re deciding whether a particular amount should stay in super or come out. It’s not perfect, but it’s often a practical proxy for the cost of leaving that capital in the system.
What this means for your next decision.
If you were already considering a withdrawal strategy ahead of Division 296 tax and 2026 CGT changes, this reform weakens the old default case for action. It doesn’t kill it off. It just means the work has to be more precise, with proper modelling across growth assumptions, inflation, family structures, and future use of capital.
And that’s the key point. A tax rule never sits on its own. It bumps into your retirement timeline, your estate plan, the assets you actually own, and whether you need flexibility outside super in the first place.
When withdrawing money from super may still make sense.
If you’ve got a large super balance, this is exactly the kind of decision where rough guesses can cost real money. The tax treatment now depends far more on the mix of assets, the expected growth profile, and how the funds fit into your wider family wealth plan.
At AMGENT, we help business owners, professionals, retirees, and families model these trade-offs in plain English. That includes stress-testing whether capital is better left in super, withdrawn gradually, or repositioned with the broader plan in mind.