Currently income earned on all superannuation balances in pension phase is tax free. For balances in accumulation phase the tax rate is 15%.

The Federal Government announced in May 2023 a proposal to levy an additional 15% tax on the earnings of a member’s total superannuation balance over $3m. While this tax is intended to commence from 1 July 2025, the legislation is yet to be drafted and put before Parliament.

Given that the proposed tax will controversially include taxing unrealised capital gains, those with more than $3m in super may wish to consider preparing a plan to minimise the tax in the event that the legislation is passed.

 

An example of how the proposed new tax will work

Danny has a total superannuation balance at 1/7/25 of $5.4m which grows to $6m by 30/6/26. Assuming no withdrawals or contributions the additional tax is calculated as follows:

STEP 1

Earnings = $6m – $5.4m = $600,000

STEP 2

% of earnings on super balances of more than $3m
= Total super balance above $3m / Total super balance at 30/6/26
= ($6m – $3m) / $6m
= 50%

STEP 3

Additional tax = 15% x (Earnings from step 1) x (% from step 2)
= 15% x $600,000 x 50%
= $45,000

For those self-managed super funds with property holdings, it is even more important for trustees to plan ahead to ensure they have adequate liquidity to continue funding pensions and the payment of the possible new tax. If the sale of property is required, these can take time. Planning ahead for such an eventuality, could improve the outcome in the event you need to sell property.

 

Meet with your wealth advisor to plan your strategy

BYRONS recommends that if you have a fund where an individual member’s balance is likely to be over $3m by 1 July 2025, that you ask to meet with a BYRONS wealth advisor to commence planning your strategy to minimise tax from the new $3m super fund tax.

 

Authorised Representative of Professional Wealth Services Pty Ltd | ABN: 58 174 609 776 | AFS Licence Number 312047

Disclaimer: This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial advice prior to acting on this information.

 

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