Highlights

  • Division 296 has sparked discussion around whether some wealth may be better held outside superannuation through structures such as trusts, investment bonds, companies or philanthropic vehicles.
  • Each alternative structure comes with its own tax treatment, administration costs, compliance requirements and long-term trade-offs.
  • Superannuation continues to offer significant concessional benefits, meaning any alternative should be assessed against the advantages of remaining within the super system.
  • With the final design of Division 296 still subject to legislation, many investors are focusing on understanding options rather than making immediate structural changes.

As discussion of Division 296 continues, attention has turned to whether holding some wealth outside superannuation might suit certain investors. The proposed measure would add 15% to the earnings attributable to balances above $3 million, and that prospect has prompted commentators to canvass alternative structures, from family trusts to investment bonds, companies and philanthropic vehicles. This article surveys those structures at a general level, weighing the kinds of trade-offs they involve. It is not a recommendation to use any of them; each carries its own rules, costs and consequences, and suitability depends entirely on individual circumstances.

The right starting point is caution. Moving assets between structures can itself trigger tax and other consequences, and no structure is inherently better than super, which retains significant advantages for many people. The purpose here is to explain the landscape, not to point toward a destination.

Direct answer: the quick summary

Trusts, investment (insurance) bonds, companies and philanthropic structures are sometimes discussed as options for holding wealth outside super in light of Division 296. Each has distinct tax features, costs and trade-offs, and none is universally preferable to superannuation, which keeps important benefits. Whether any structure suits an individual depends on their goals, circumstances and the final form of the measure, so these are options to explore with a licensed adviser rather than steps to take on general information.

Why this matters now

Superannuation has long been a tax-favoured environment for retirement savings, and for good reason. Division 296 would add a layer of tax to the portion of earnings linked to very large balances, which has led some people to ask whether other structures deserve a place in their thinking. The question is reasonable, but it is easily oversimplified. Super continues to offer concessional treatment that many alternatives do not match, and the measure as proposed touches only a proportion of earnings above a high threshold.

It matters now because decisions about structures take time and often cannot be undone cheaply. Establishing a trust, acquiring an investment bond or setting up a company involves costs, ongoing obligations and tax considerations both at entry and over time. Understanding the trade-offs before acting, and confirming the final shape of the measure, helps avoid moves that look attractive in the abstract but sit poorly with an individual's actual goals.

Who may be affected

Division 296 is assessed at the individual level, on the total superannuation balance across all funds at year-end, and applies only above $3 million. On the figures cited when the policy was introduced, the affected group is small, in the order of half a per cent of account holders, though that still represents tens of thousands of people. The original design did not index the threshold, so a wider group may take an interest over time.

Those most likely to consider structures beyond super are people with balances above or approaching the threshold who also have wealth they could direct elsewhere. Even for them, the conclusion is not foregone; the existence of an alternative does not make it suitable, and the comparison with simply remaining in super is often closer than it first appears.

What investors should understand

A clear-eyed comparison starts with what super still offers. Within super, earnings are generally taxed concessionally, and that remains true for the portion of a balance below the threshold and, even above it, for the part of earnings not caught by the additional charge. Any structure outside super has to be weighed against that baseline, not against a strawman.

It also helps to recall how the measure works. The exposed proportion equals the amount above $3 million divided by the total balance, and the extra 15% applies to that proportion of earnings. The original proposal measured earnings via the year-on-year movement in balance, which could capture unrealised gains, a debated feature of the original proposal rather than settled law. The case for or against any structure can shift depending on how this is ultimately resolved, which is a strong reason not to restructure prematurely.

A general survey of structures

Family and discretionary trusts

Family or discretionary trusts allow a trustee to hold assets for a class of beneficiaries, with discretion over how income is distributed. Their potential appeal lies in flexibility around distributions. Against that, trusts involve establishment and ongoing administration costs, complex tax rules, compliance obligations and questions of control and succession. They are not a tax-free environment, and income is generally taxed in the hands of beneficiaries. Whether a trust suits a particular family depends on far more than the super measure alone.

Investment (insurance) bonds

Investment, or insurance, bonds are a structure with their own tax treatment, where earnings are taxed within the bond and certain holding periods can affect outcomes for the investor. Some people consider them for their particular features. Trade-offs include the specific rules that govern them, fees, investment options and the consequences of accessing funds at different times. Like any structure, they need to be assessed against an investor's goals and time horizon, not adopted simply because they sit outside super.

Companies

Holding investments through a company is another arrangement sometimes raised. A company has its own tax rate and rules, and can offer a degree of structure for certain purposes. The trade-offs include establishment and running costs, the tax treatment of profits and distributions, and the administrative burden of maintaining a company. Whether this is appropriate depends heavily on individual circumstances and broader objectives.

Philanthropic structures

For those with charitable intentions, philanthropic structures are sometimes discussed as a way to direct wealth toward giving in an organised manner. These vehicles have their own rules and purposes, and are driven primarily by genuine philanthropic goals rather than by tax considerations alone. As with the others, they are an option to explore with appropriate guidance, not a default response to a tax change.

SMSF and managed super fund considerations

Comparing structures beyond super with what a person already holds inside super, whether in a self-managed superannuation fund (SMSF) or a large fund, is essential. Moving assets out of super can crystallise tax and forfeit concessional treatment, so the act of restructuring is itself consequential. For SMSF members with illiquid assets, the practicalities of any transfer add further complexity. None of this means structures are unsuitable; it means the comparison must be made carefully, with the full picture in view and with qualified professionals.

Possible planning options

Commentators discuss several areas that individuals sometimes review with a licensed adviser. These are options to consider, not recommendations.

  • Comparing the after-tax outcome of remaining in super with that of an alternative structure, including all costs.
  • Considering whether family or discretionary trusts suit broader family and succession goals.
  • Examining investment (insurance) bonds for their particular features and holding-period rules.
  • Looking at companies or philanthropic structures where they align with genuine objectives.
  • Ensuring any move is weighed against the tax and consequences of leaving super in the first place.

Each option carries trade-offs, and the appropriate step is a discussion with a licensed adviser who can weigh them against an individual's circumstances.

Risks and uncertainties

The first risk is restructuring on the basis of an unsettled measure. Division 296's design and timing have been debated, and acting decisively before the rules are final could prove premature. The second is underestimating the cost and complexity of structures, which can erode any notional benefit. The third is overlooking what is given up by leaving super, including concessional treatment and simplicity.

The treatment of unrealised gains, the absence of indexation in the original design and the precise earnings calculation all bear on the comparison and remain uncertain. Because of this, decisions about structures are best made with professional guidance and only when the final detail is clear.

What to watch before 1 July 2026

  • Whether the measure is legislated, amended or deferred, and confirmation of the commonly cited 1 July 2026 start.
  • The final earnings calculation, including the treatment of unrealised gains.
  • Any decision on indexing the $3 million threshold.
  • Guidance that may affect the relative merits of structures inside and outside super.