Overview
The Government has announced that individuals with total superannuation balances (TSBs) exceeding $3m (both their pension and accumulation accounts combined) at the end of financial year will be taxed an additional 15% on earnings. This tax only applies to proportion of earnings attributable to balance exceeding $3m. This means that earnings relating to balance of the fund $3m or below will continued to be taxed at 15% percent or less.
This measure will take effect on 1 July 2025 and apply to the 2025-26 financial year onwards. This tax will first apply to members with balances over $3m as at 30 June 2026. Members who withdraw amounts and reduce the balance to below $3m by 30 June 2026 will not be affected by this new tax.
This additional tax is assessed based on individual member’s balance and not the total fund balance. This means a 2 members fund can have $6 million in super, as long as the balance of each member is split evenly and neither goes over $3m.
Administration of Tax
The application of this extra tax is similar to the existing “Division 293” tax (which coincidentally, is also 15%) in the way that the tax bill will be sent to the member of the fund and relevant tax payable can be released from the superfund.
Examples
Balances unaffected by this proposed legislation change
- Michael has balance in his superfund of $135,000 at 30 June 2025.
- Michael has balance in his superfund of $155,000 at 30 June 2026.
- The change will not affect Michael as his total super balance is below $3m at 30 June 2026.
Balance exceeding $3mil
- Garry’s member balance is $5 million at 30 June 2025, which grows to $5.5 million at 30 June 2026. He makes a downsizer contribution of $300k and draws down pension of $100k.
- Garry’s earnings for the purpose of this special extra tax is calculated as:
Closing Balance at 30 June 2026: $5.5m
Less: Opening Balance at 30 June 2025: ($5.0m)
Add: Pension Paid: $100k
Less: Contribution Made: ($300k)
Notional Earnings: $300k - The proportion of fund’s earnings subject to the special tax is:
($5.5m – $3m)/$5.5m = 45.45% - His additional tax payable for the 2025-26 is calculated as:
15% x $300k x 45.45% = $20,453 (approx.)
Please contact our office if you would like to know more about how this new tax may impact you.
