Proposed Changes to Superannuation Taxation in Australia

The Australian Federal Government has unveiled a new draft bill aimed at revising the taxation of superannuation. The measures, initially announced earlier this year, are specifically targeted at individuals with superannuation balances exceeding $3 million.

Scheduled to take effect from July 1, 2025, the bill will implement a new tax provision named ‘Division 296 tax.’ This provision would impose an additional 15% tax on the earnings exceeding the $3 million threshold. Notably, the $3 million cap is not subject to indexing, potentially impacting a larger number of individuals over time as asset values rise.

The draft bill maintains the current rules for taxing earnings within superannuation funds, possibly leading to a combined tax rate of 30% for those affected. The definition of ‘earnings’ encompasses the variation in an individual’s total superannuation balance, including withdrawals and contributions, irrespective of realised capital gains.

Moreover, individuals facing a tax liability will have the option to settle it either from their personal non-superannuation resources or from their superannuation savings, provided they hold multiple accounts.

While the proposed changes have sparked debate, the Federal Opposition has indicated a possibility of repeal if elected in the upcoming election. The bill’s first assessment of superannuation balances is expected to occur by June 30, 2026, with notices of tax liability anticipated in the 2026-27 financial year.

The bill’s implementation, if passed, is poised to have a substantial impact on high-balance superannuation holders, potentially influencing retirement planning and investment strategies.

As always, we recommend that individuals obtain professional advice relevant to their personal objectives and outcomes. If you want to understand the implications of this proposal in greater detail, please contact one of the SG Advisory Financial Planners to help.