More info on the proposed super changes from 1 July 2025

A little more clarity… Individuals with total superannuation balances over $3 million at the end of a financial year will be subject to an additional tax of 15% on certain earnings.

Earnings are calculated by the difference in total superannuation balance at the start and end of the financial year, adjusting for withdrawals and contributions.

Earnings = TSB Current Year – TSB Previous Year + Withdrawals – Net contributions

The additional tax only applies to earnings corresponding to funds above $3 million.

Proportion of Earnings = (TSB Current Year – $3 million) / TSB Current Year

Negative earnings can be carried forward and offset against this tax in future years’ tax liabilities.

The tax liability is calculated as follows:

Tax Liability = 15% x Earnings x Proportion of Earnings

Individuals will have the choice of either paying the tax out-of-pocket or from their superannuation funds. Individuals who hold multiple superannuation funds can elect the fund from which the tax is paid.

Example 1

Louise is 40 and working. At 30 June 2026, she has a balance of $2 million in an APRA-regulated fund, and a balance of $3 million in an SMSF. At 30 June 2025, the balance of her APRA-regulated fund was $1.9 million and the balance of her SMSF was $2.9 million. She does not meet a condition of release, so she has no withdrawals during the year. She makes $20,000 of concessional contributions into her SMSF. Her contributions net of tax on contributions is $17,000.

This means Louise’s calculated earnings are: $5 million – $4.8 million – $17,000 = $183,000

Her proportion of earnings corresponding to funds above $3 million is: ($5 million – $3 million) ÷ $5 million = 40%

This means her tax liability for 2025-26 is: 15% × $183,000 × 40% = $10,980

Louise elects to pay $5,000 from her APRA-regulated fund and $5,980 from her SMSF.

Example 2

Dave is 70 and has two APRA-regulated funds and one SMSF. At 30 June 2025, his TSB across all funds was $7 million. During 2025-26, he withdraws $400,000 from his SMSF and makes no contributions. At 30 June 2026, his TSB across all funds is $6 million.

This means Dave’s calculated earnings are: $6 million – $7 million + $400,000 = – $600,000

His proportion of earnings corresponding to funds above $3 million is: ($6 million – $3 million) ÷ $3 million = 50%

The earnings loss attributable to the excess balance is $300,000. Dave can carry forward the $300,000 to offset future excess balance earnings.

At 30 June 2027, Dave’s funds make earnings on his excess superannuation balance of $650,000. He carries forward the earnings losses attributable to his excess balance at 30 June 2026 of $300,000 and is only liable to pay the tax on $350,000 of earnings.

This means his tax liability for 2026-27 is: 15% × $350,000 = $52,000

And of course they end with “It is the Government’s intent to ensure broadly commensurate treatment for benefit interests. Treasury will consult further on the appropriate treatment for benefit interests.”

Advertisement

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: