Treasury has released draft legislation to enact the Government’s plan to increase the tax rate on earnings on superannuation balances above $3m from 15% to 30% from 1 July 2025.
The release of the draft is the final step before the legislation is introduced into Parliament and a step closer to reality.
The draft legislation appears largely unchanged from the Government’s original announcement.
The proposed calculation aims to capture growth in total super balance (TSB) over the financial year, allowing for contributions (including insurance proceeds) and withdrawals. This method captures both realised and unrealised gains, enabling negative earnings to be carried forward and offset against future years.
The ATO will perform the calculation for the tax on earnings. TSBs over $3 million will be tested for the first time on 30 June 2026, with the first notice of assessment expected to be issued to those impacted in the 2026-27 financial year.
From a planning perspective, for those with superannuation balances close to or above $3m, it will be important to explore the implications of your personal situation.
There is no one-size-fits-all strategy here; what is best for you depends on your circumstances. Superannuation, even with the increased tax, remains a tax-efficient vehicle.
If you’re at all concerned the 30% tax will impact you, be sure to contact us or make an appointment today.