Upcoming changes for large superannuation funds
The Federal Government has announced a plan to adjust the tax concession status for superannuation balances over $3 million as of 1 July 2025.
The original announcement states earnings on balances over $3 million would be taxed at 30% rather than 15%.
Please note that this is not yet legislation, and only a proposal at this stage.
However, we now have some further details on how the Government proposed for this to be implemented:
– The measure is limited to those who have more than $3 million in super at the end of a financial year (therefore it’s the balance in super at 30 June 2026 that matters initially).
– It’s $3 million per person, not per fund.
– The $3 million includes all of an individual’s super – i.e. their pension and accumulation accounts combined. If you have multiple superannuation accounts, they will all be included (i.e. this does not only apply to Self-Managed Superannuation Funds).
– The $3 million won’t be indexed, so it won’t increase with inflation each year.
For those who are subject to the new rules, there are three essential elements:
1. There will be a new, special extra tax (at 15%) on some of their super fund’s earnings.
2. The tax will be levied on the member personally, not their fund.
3. They will be allowed to take money out of their super fund to pay it.
How will ‘earnings’ be calculated?
Importantly, just some of the fund’s earnings will be taxed and ‘earnings’ for this purpose has a special definition. In this case, earnings don’t just include income your super fund would normally pay tax on (things like interest, rent, dividends or capital gains on assets sold). It also includes growth in assets that the fund hasn’t sold.
You can read the Treasurer’s press release, a factsheet providing more detail and worked examples here.
If you’re wondering how these changes might affect you or you want to discuss potential strategies, get in touch with our team.