Update on $3m super balance tax

Update on $3m super balance tax


The Treasury released the highly anticipated draft legislation on superannuation. This affects superannuation balances above $3m with an increase in tax rate from 15% to 30% from 1 July 2025.

Notably, the draft legislation allows negative earnings to be carried forward and offset against future years. Otherwise the Treasury’s proposal is largely unchanged from the Government’s original announcement with the proposed amendments inserted into the Income Tax Assessment Act 1997 as Division 296 (Better targeted superannuation concessions).

How to prepare

This is an ideal time to undertake a detailed review of your superannuation, particularly if you are over or approaching the $3m threshold. Everybody’s circumstances are different and it is important to take action as soon as you can to ensure that there is sufficient time to action any planning opportunities. Although this is a significant increase in tax, superannuation is still a good investment vehicle.

A brief summary of the proposed tax

  • An additional 15% tax is levied on the portion of earnings and growth (both realised and unrealised) of your individual super balance above $3m
  • Losses are carried forward to future income years, but are not refunded
  • Losses are lost on death
  • The $3m threshold is not indexed
  • The tax is levied to the individual and can be paid personally or request a release from the super fund
  • Structured settlements (e.g. compensation proceeds, but not disability insurance).

For more details on the draft legislation click here.

Actions required

  • Obtain copies of your member statements issued by your superannuation fund and/or financial statements for your SMSF
  • Ascertain your current member balance(s)
  • Confirm latest contributions made to your super fund
  • If you have a spouse or partner, ascertain their super balances.

Contact your SW advisor for your tailored strategy or assist you with a comprehensive review of your superannuation to ensure you are maximising it to its fullest potential.

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