Super Tax on Balances Over $3 Million: What You Need to Know
A new super tax on balances over $3 million is in the spotlight — and it’s not just a concern for the ultra-wealthy. This proposal could change how we manage and protect long-term investments.
What’s Happening?
The Federal Government has introduced draft legislation to apply a 15% tax on super earnings over $3 million. What makes this unusual is that it includes unrealised gains – growth on assets you haven’t sold yet.
If passed, the change would take effect from 1 July 2025, with the first tax assessments happening in the 2026–27 financial year. The law hasn’t been passed yet – it’s currently under review in the Senate.
The Proposal: Super Tax on Balances Over $3 Million
Here’s a breakdown of the key points:
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A 15% tax will apply to earnings on the portion of your super balance above $3 million
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The tax includes both realised and unrealised gains
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The $3 million threshold won’t be indexed, so more people may be affected over time
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You can carry forward losses, but you won’t receive refunds
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Individuals will be taxed directly – but they can release money from their super to pay
This change would apply to all super accounts, including Self-Managed Super Funds (SMSFs).
Calculating the Super Tax on Balances Over $3 Million
Here’s how the tax would be calculated under the proposed rules:
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Adjusted Super Balance:
Closing balance + withdrawals – contributions -
Earnings:
This year’s adjusted balance – last year’s adjusted balance -
Excess Proportion:
(Closing balance – $3M) ÷ Closing balance -
Taxable Earnings:
Earnings × Excess proportion -
Tax Payable:
Taxable earnings × 15%
For example, imagine your super balance increased by $200,000 and $1 million sits above the cap. The tax would apply to roughly one-third of the gain – even if no assets were sold.
Why This Matters
We’ve had plenty of water cooler chats about this one at Inline Partners. While the policy targets high balances now, it may signal a broader shift in tax rules.
Super has always been one of the most tax-friendly ways to grow retirement wealth. But this proposal could change that – especially if unrealised growth becomes a standard taxable event.
This also makes us ask:
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Might future policies target investment properties or family trusts?
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Will other structures see similar treatment?
It’s too early to say. But it’s not too early to prepare.
Don’t “Set and Forget” Your Structure
Many business owners set up their financial structure once and never revisit it. That’s risky.
At Inline Partners, we build strategies based on the current rules – but we also prioritise flexibility. The financial landscape changes. Your structure should be able to change with it.
Key Considerations for the Super Tax on Balances Over $3 Million
- Start by checking your super balance – are you approaching the $3M cap?
- Next, assess your fund’s liquidity. Could you cover a tax bill from paper gains?
- Review how your assets are currently valued, particularly property or unlisted shares, so you’re not caught off guard.
- Planning ahead now can save major headaches later.
- Finally, review your full structure. Your trusts, companies, and super should work together smoothly.
Planning Ahead
Want to make sure your overall structure is still serving you? Contact us to chat.
Our Take
This super tax on balances over $3 million shows how quickly the rules can shift – even for structures that have felt stable for decades.
Whether you’re well above the threshold or closing in on it, this is your chance to step back, reassess, and ensure you’re ready for whatever happens next.
Need support navigating this or planning for what’s next?
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