This week, Treasurer Jim Chalmers has announced several significant superannuation tax changes. Here’s what you need to know.
The super sector has welcomed the proposal as a significant improvement over the original plan, which would have imposed a tax on increases in the value of super balances, even if you hadn't sold the underlying assets. These are unrealised or paper gains. Usually, tax only applies once you sell something.
The changes also include delaying the $3million superannuation tax until July 2026 to allow for a series of amendments and further consultation.
How has the super tax proposal changed
The government’s original proposal was for an additional tax of up to 15 per cent on earnings of super balances worth more than $3 million. Under the revised plan, the $3 million threshold will remain, but the legislation will introduce a new threshold of $10 million.
The total tax rate applied to earnings on super balances between $3 million and $10 million will be 30 per cent.
For balances of more than $10 million, the total tax rate will be 40 per cent, affecting approximately 0.1 per cent of the population. The tax on balances in the accumulation phase under $3 million will remain at 15 per cent.
Less than 0.5 per cent of the population is estimated to have more than $3 million in super and will pay the 30 per cent tax rate.
Both the $3 million and $10 million thresholds will be indexed, which means they will increase in line with inflation.
One of the most controversial elements of the original plan was the tax on unrealised gains. Removing the tax on those gains is good news for those who have chosen to hold assets such as farmland or start-ups in super. These assets will now only incur tax on the increase in value if the asset is sold and cash proceeds are available to settle the tax.
The low-income superannuation tax offset (LISTO) is also changing
The income threshold for receiving this bonus payment will increase from $37,000 to $45,000, and the maximum payment will increase from $500 to $810, effective July 1, 2027.
Association of Superannuation Funds Australia chief executive Mary Delahunty said the changes would make the system fairer.
“Super offers working Australians a deal: if you put money away to support yourself in retirement, and reduce your reliance on the age pension, you get a tax concession,” she said.
“Currently, for many of the lowest-earning Australians, the deal isn’t working because their tax rate is higher on super than on take-home pay.”
If you have any concerns about how the changes may impact your financial plan, it is important to get advice. Please get in touch.
General Advice Warning: The information provided in this article is general in nature and does not consider your particular investment objectives, financial situation, or insurance needs; we therefore recommend you seek advice tailored to your individual circumstances before making any specific decisions.
Dobbrick Financial Services (Gympie) Pty Ltd ABN 48 931 205 109 and Dobbrick Financial Services (Ipswich) ABN 86 100 184 521 & DFS Oakland ABN 64 340 527 395 and their advisers are authorised representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
