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Proposed Tax on Superannuation Balances above $3 Million

Proposed Tax on Superannuation Balances above $3 Million

The federal government has announced that it plans to increase the tax rate on earnings for individuals with superannuation balances above $3 million.  This change is expected to commence on 1st July 2025 and apply to the 2025-26 financial year onwards.  

 The tax rate will be increased from 15% to 30% on earnings that relate to an individual’s superannuation balance above $3 million.  Earnings corresponding to balances below $3 million will continue to be taxed at 15% or less under current rules.   

 As outlined in Treasury’s factsheet, the $3 million threshold is referenced to an individual’s total superannuation balance (TSB) which includes members pension and accumulation accounts.     

 For example, if an individual had a total superannuation balance of $5 million as at 30th June 2026, the additional 15% tax would apply to 40% ($2 million/$5 million) of it’s income for that financial year.  Therefore, the additional tax on total fund earnings of $250,000 would be calculated as follows: 

  • $250,000 (earnings) * 40% (proportion above $3m) * 15% (additional tax) = $15,000 

The remaining income of the fund that relates to the portion below $3 million would be taxed under current rules. 

It is proposed that individuals will have the choice of either paying the additional 15% tax themselves or from their superannuation fund.  Notices of assessment are to be issued by the ATO to individuals following lodgement of the 30 June 2026 Superannuation Fund Income Tax Return.   

 For further information, please contact a team member at Charman Partners.  

Contributed by Nathan Batty.

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