Federal Government’s Proposed Superannuation Changes

Proposed changes for members with balances over $3m

• It is proposed, starting from 1 July 2025 (2026FY), individuals with superannuation balances over $3m face a higher tax on their superannuation earnings
• The $3m cap is fixed and is not proposed to be indexed
• Superannuation fund “earnings” on balances over $3m are proposed to be subject to an additional tax of 15%, effectively increasing the tax rates from 15% to 30%
• Essentially, “earnings” is an annual calculation of the net growth of an individual’s total superannuation balances, across all their superannuation funds, and includes unrealised gains
• The individual will be levied with the tax personally and will be issued a notice from the ATO (similar to Division 293)
• The tax can be paid personally or released from their superannuation fund

Balances under $3m

• Individuals with total superannuation balances under $3m are not affected by the proposed changes
• Earnings on pension balances remain tax-free
• Earnings on accumulation accounts will continue to be taxed at 15%

Where to next?

Treasury has entered a period of consultation before the government introduces the legislation into parliament.

As these proposed changes are not yet legislation and are not due to commence until 1 July 2025, there are no changes to your current superannuation taxation. There are still a number of steps required to take place before the proposed changes are legislated.

Perks will continue to provide updates on this proposed change.

Superannuation Overview – What is not changing?

Superannuation’s sole purpose is to provide retirement benefits for members or their dependants if a member dies before their retirement.

To assist in growing member benefits, superannuation is tax concessional.
Earnings within superannuation are taxed at a maximum rate of 15% enabling members to achieve higher after-tax returns compared to investing outside of super where earnings are taxed at the individual’s marginal tax rate.

Once a member meets a condition of release, a pension can be commenced up to $1.7m (subject to indexation) allowing for the income supporting the pension to be exempt from taxation.

Any capital gains on assets held within superannuation are eligible for a 1/3 discount if held for more than 12 months, effectively providing a 10% tax on the gain.

The table below shows the tax on income inside superannuation compared to personal income:

Withdrawals from superannuation after the age of 60 are tax-free to members.

The proposed changes do not change the tax inside the superannuation fund.

If you have any questions about the proposed changes and how they might affect you, please get in touch with your Perks Adviser, Kerry Bosnich, or Neil Oakes.