From 1 July 2025, the government will reduce the tax breaks available to individuals whose total superannuation balances at the end of the fiscal year exceed $3 million.
With this change, the headline tax rate on earnings corresponding to that proportion of the balance greater than $3 million will increase from 15% to 30%.
The tax only applies to the proportion of earnings corresponding to balances above $3 million. This means that earnings corresponding to funds below $3 million will continue to be taxed at 15 per cent or less.
- Earnings are calculated by comparing the difference in TSB at the beginning and end of the fiscal year, after adjusting for withdrawals and contributions.
- Negative earnings can be carried forward and offset against this tax in future years’ tax liabilities.
- Individuals who hold multiple superannuation funds can elect the fund from which the tax is paid.
- Individuals will have the choice of either paying the tax out-of-pocket or from their superannuation fund
- This tax will be separate from an individual’s personal income tax, similar to the existing Division 293 tax
This change is expected to affect less than 0.5% of people who have a superannuation account. By 2025-26, it is expected to apply to fewer population roughly around 80,000 people, meaning that more than 99.5 percent of people with a superannuation account will remain unaffected.
Source: Treasury.gov.au
