{"schema_version":"1.0","generated_by":"COLE — Citation Operations & Legal Engine","product_id":"super-to-trust-exit","title":"Super-to-Trust Exit Engine","site":"https://taxchecknow.com/au/check/super-to-trust-exit","authority":"ATO","authority_url":"https://www.ato.gov.au","jurisdiction":"Australia","language":"en-AU","currency":"AUD","last_verified":"April 2026","legislation":"Income Tax Assessment Act 1997 s301-10 (tax on superannuation benefits — 0% if 60+ retired, 15% on taxable component if under 60) · ITAA 1997 s295-385 (super fund earnings tax — 15% accumulation, 0% pension phase on TBC portion) · ITAA 1997 Subdivision 296-B (Division 296 additional 15% tax on earnings above $3M TSB from 1 July 2026) · ITAA 1997 s292-85 (non-concessional contribution cap — $120k/year, $360k bring-forward) · Income Tax Rates Act 1986 Part III (trust income tax rates — distributed at beneficiary marginal rate, undistributed at 47% top rate)","legal_anchor":"ITAA 1997 s301-10 (super benefit tax on withdrawal) + Subdivision 296-B (Division 296)","deadline":{"iso_date":"2026-06-30T23:59:59.000+10:00","display":"30 June 2026","description":"30 June 2026 — last planning window before Division 296 commences 1 July 2026","urgency_label":"DIV 296 STARTS — IRREVERSIBLE DECISION WINDOW"},"key_facts":{"withdrawal_tax_60_retired":"0% (s301-10)","withdrawal_tax_under_60":"15% on taxable component","super_accumulation_rate":"15% on earnings","super_pension_phase_rate":"0% on TBC portion","trust_distributed_rate":"Beneficiary marginal (19-47%)","trust_undistributed_rate":"47% (top marginal)","division_296_additional":"15% above $3M TSB","division_296_commencement":"1 July 2026","ncc_re_entry_cap":"$120k/year or $360k bring-forward","typical_break_even_horizon":"15-25 years (many scenarios: never)"},"formula":"Break-even years = Exit Tax / (Annual Div 296 Saved − Annual Trust Earnings Differential). If Annual Trust Differential > Annual Div 296 Saved, break-even = never (negative annual delta). Exit Tax = Taxable Component × (15% if under 60 else 0%). Annual Trust Differential = Balance × Earnings Rate × (Effective Trust Rate − Super Rate). Annual Div 296 = Balance × Earnings Rate × ((TSB − $3M) / TSB) × 15%.","thresholds":[{"label":"Under 60 + any TSB — exit tax kills the case","value":1,"status":"deep_trap"},{"label":"60+ pension phase — exiting 0% environment is indefensible","value":2,"status":"trap"},{"label":"60+ accumulation + TSB under $3M — no Div 296 to avoid","value":3,"status":"clear"},{"label":"60+ accumulation + TSB $3M-5M — break-even 15-25+ years","value":4,"status":"risk"},{"label":"60+ accumulation + TSB over $5M + high beneficiary rates — still fails most scenarios","value":5,"status":"trap"}],"common_ai_errors":[{"error_id":1,"ai_says":"ChatGPT says: If your super is over $3M, exiting to a family trust avoids Division 296 and is the obvious solution","correct":"Reality: Exit to trust replaces a 15% (accumulation) or 0% (pension) earnings environment with a 32-47% trust environment, PLUS exit tax if under 60, PLUS irreversibility via NCC caps. For most scenarios, break-even is 15-25 years or never. Div 296 at 15% on earnings above $3M is almost always less expensive than trust marginal rates on ALL earnings."},{"error_id":2,"ai_says":"ChatGPT says: Withdrawal from super is tax-free if you're over 60, so exit is free","correct":"Reality: The 0% withdrawal tax (s301-10) is genuine for retired members 60+, but it does not make exit 'free'. The opportunity cost is the permanent loss of the super earnings environment — 15% (accumulation) or 0% (pension phase on TBC). On $4M at 5% earnings, losing pension phase costs ~$94,000/year in a trust at 47% vs $0 in super — forever. Tax-free exit is a one-time zero; the ongoing differential is a decades-long cost."},{"error_id":3,"ai_says":"ChatGPT says: Family trusts are tax-efficient because of distribution flexibility","correct":"Reality: Trust tax efficiency depends on ACTUALLY distributing to low-bracket beneficiaries every year. Undistributed income = 47% top marginal. If your spouse works, adult kids have normal incomes, and you want to actually use the trust income for your own lifestyle (not gift it), the effective rate climbs to 37-45%. Super's 15% rate applies uniformly with no distribution behaviour required."}],"faq":[{"id":1,"question":"When is it tax-free to withdraw from super?","answer":"Under ITAA 1997 s301-10, withdrawal from super is tax-free on the taxable component for members aged 60 or over who have met a condition of release (typically retirement or reaching age 65). For members under 60, the taxable component is taxed at 15% plus Medicare (effective 17%) at withdrawal. The tax-free component (post-tax contributions and crystallised tax-free amounts) is always tax-free regardless of age. Most SMSFs are 70-90% taxable component."},{"id":2,"question":"Why is exiting super to a trust usually a bad deal?","answer":"Three reasons: (1) Earnings tax jumps from 15% (accumulation) or 0% (pension phase) to beneficiary marginal rates of 19-47%, typically averaging 32-45% effective after realistic distribution patterns. (2) If under 60, exit tax of 15% on the taxable component applies — $480,000 on a $4M SMSF at 80% taxable. (3) Exit is irreversible: non-concessional contribution caps limit re-entry to $120,000 per year or $360,000 bring-forward, making it impossible to rebuild a large super balance quickly. The Division 296 saving at 15% on earnings above $3M is almost always smaller than the annual differential plus amortised exit tax."},{"id":3,"question":"What are the in-super alternatives to exit?","answer":"Three main options: (1) Spouse balance equalisation — split super between partners so each stays under the $3M threshold. Two members each with $2.5M = $0 Division 296. Fully reversible. (2) Staged pension phase transition at 60+ with a condition of release — earnings on the Transfer Balance Cap portion (currently $2.0M indexed) are taxed at 0%, permanently eliminating earnings tax on that tranche. (3) The SMSF cost-base reset election under Subdivision 296-B (see AU-13) — protects pre-2026 embedded gains from Division 296 calculations without requiring exit from super. These should all be modelled before considering exit."},{"id":4,"question":"What is the break-even horizon for exit to a family trust?","answer":"For under-60 members, break-even is typically 20-30 years or never — the $480,000+ exit tax plus ongoing earnings differential usually exceeds the annual Division 296 saving. For 60+ accumulation members with TSB between $3M and $5M and low beneficiary tax rates, break-even can land in the 15-20 year range but is highly sensitive to beneficiary bracket assumptions. For pension phase members, break-even is almost always 'never' — the differential between 0% pension and 32-47% trust is too large to recover. Most realistic scenarios fail break-even over any viable horizon."},{"id":5,"question":"Can you ever return to super after exiting?","answer":"Yes, but slowly and subject to strict caps. Non-concessional contributions under ITAA 1997 s292-85 are capped at $120,000 per year (or $360,000 under the bring-forward rule for members under 75). Rebuilding a $3M+ balance via NCC alone would take 8-10 years at maximum, and only if the NCC rules remain available (they've been tightened multiple times). Concessional contributions are capped at $30,000 per year. In practice, exit effectively locks capital out of the super environment for the remainder of retirement."}],"sources":[{"title":"ATO — Tax on super benefits (withdrawal tax rules)","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/withdrawing-and-using-your-super/tax-on-super-benefits"},{"title":"ATO — Super contribution caps (NCC re-entry after withdrawal)","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/contributions-caps"},{"title":"ATO — Key superannuation rates and thresholds (includes Division 296)","url":"https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds"},{"title":"ATO — Pension phase and Transfer Balance Cap","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/transfer-balance-cap"}],"products":{"tier1":{"name":"Your Exit Break-Even Pack","price":67,"currency":"AUD","description":"See the actual year where exit tax and lost earnings are recovered — before you act","url":"https://taxchecknow.com/au/check/super-to-trust-exit/success/assess"},"tier2":{"name":"Your Full Exit Decision Model","price":147,"currency":"AUD","description":"The full 20-year model plus the in-super alternatives most accountants skip over","url":"https://taxchecknow.com/au/check/super-to-trust-exit/success/plan"}},"monitor_urls":["https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/accessing-your-super"],"canonical":"https://taxchecknow.com/au/check/super-to-trust-exit","api_endpoint":"/api/rules/super-to-trust-exit","generated_at":"2026-04-22T13:32:08.224Z"}