Will the Proposed Superannuation Tax Affect You?
The Australian Government is proposing a new tax on superannuation balances over $3 million. If this change passes in Parliament, it’s important to understand how it may affect you now or in the future.
What Could be Changing?
At present, superannuation earnings are taxed at a concessional rate of up to 15%, but the Australian Government is proposing a change that could see earnings on super balances over $3 million taxed at an additional 15%. If it passes, the change will kick in from 1 July 2025, and may see a total tax rate of 30% applied to people in this category. Here’s what you need to know.
If your super balance exceeds $3 million:
- The first $3 million may still be taxed up to 15%
- Any earnings on the amount above $3 million may be taxed up to 30%
- This isn’t a tax on your balance itself, but on the earnings calculated on the increase in your total super balance over the year.
Who Might This Affect?
While the government expects this change might affect around 80,000 Australians if it passes, if you’ve been actively contributing to super over time, particularly if you’ve sold assets such as property or shares within your fund, or if you hold land or business premises in a Self Managed Superannuation Fund (SMSF), it could be worth booking an appointment with your accountant or financial adviser to review your position.
How Would the Tax be Calculated
If it passes, the new tax is likely to be based on an increase in your total super balance, not just income from dividends or assets. This means you could be taxed on unrealised gains, even if no assets were sold. This could be particularly relevant for those holding illiquid or appreciating assets, such as farmland in an SMSF.
What Should You Do if the Legislation Passes?
If this legislation passes, it won’t kick in until 1 July 2025, but now’s the time to get ahead.
We recommend:
- Reviewing your current superannuation balance and projected growth
- Understanding the structure of your SMSF, if applicable
- Seeking advice on your strategy going forward.
Need help understanding your position?
For many of our clients, superannuation is a tool for wealth building. For those with significant business or farming assets, small changes in legislation can have big consequences for you and your family.
If you’re unsure whether this change might affect you, we’re here to talk it through. Book an appointment with us to ensure your super strategy aligns with your broader goals – don’t get caught off guard come July 2025.
Contact your local office today, we’ll help you navigate the best opportunities available before the clock runs out.