Government’s proposed changes to the taxation of super

The Government has announced its intention to change the tax concessions for certain super accounts if you have a total super balance of more than $3 million.

The Government has announced its intention to change the tax concessions for certain super accounts if you have a total super balance of more than $3 million. Whilst it’s just a proposal at this time, you may be wondering if it could apply to you and how it may impact your retirement plans.

What is proposed to change?

Currently, investment earnings within the accumulation phase of super are taxed at a maximum rate of 15%. It’s proposed that an additional tax of 15% will apply on a portion of account earnings if your ‘total super balance’ (TSB) exceeds $3 million. If your TSB is less than $3 million, this change will not impact you and investment earnings on your accumulation balance will continue to be taxed at the maximum rate of 15%.

What is ‘total super balance’?

Generally, your TSB is the sum of all amounts you have in the super system (certain exceptions apply). At a high level, it includes:

  • your accumulation account balances
  • your super pension accounts, and
  • the outstanding balance of a Limited Recourse Borrowing Arrangement (if you have a Self- Managed Super Fund which has borrowed to invest), in certain circumstances.

Exceptions and modifications may apply. Calculating TSB can be complex, so it’s important to seek advice.

When will this change start?

Right now, this is only a proposal. Based on the information released by the Government, it’s currently intended that this change will commence on 1 July 2025. The first notices for the additional tax liability will be sent in the 2026/27 financial year. Legislation will need to pass to implement the proposal and some of the details may change.

Should I change my retirement savings strategy and is super still worthwhile?

For now, it’s best to be aware of the possible change and wait for the final legislation and details before considering the best option for your circumstances. The most appropriate option can be different for everyone and may even change as your personal circumstances change.

If your TSB is above $3 million, super may still offer concessional tax rates on earnings when compared to your marginal rate of tax, which could be as high as 47%. There are other potential benefits to super, aside from what for many is a concessional rate of tax on earnings.

Please contact your Financial Adviser if you’d like more information about how this proposal could apply to you if it does become law, and to ensure the strategies you put in place are right for you.


Important Information

This publication is prepared by Actuate Alliance Services Pty Ltd (ABN 40 083 233 925, AFSL 240959) (‘Actuate’), a member of the Insignia Financial group of companies (‘Insignia Financial Group’). The information in this publication is general only and has not been tailored to individual circumstances. Before acting on this publication, you should assess your own circumstances or seek personal advice from a licensed financial adviser. This publication is current as at the date of issue but may be subject to change or be superseded by future publications. In some cases, the information has been provided to us by third parties. While it is believed that the information is accurate and reliable, the accuracy of that information is not guaranteed in any way. Past performance is not a reliable indicator of future performance, and it should not be relied on for any investment decision. Whilst care has been taken in preparing the content, no liability is accepted by any member of the Insignia Financial group, nor their agents or employees for any errors or omissions in this publication, and/or losses or liabilities arising from any reliance on this document. This publication is not available for distribution outside Australia and may not be passed on to any third person without the prior written consent of Actuate.

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