According to the government, from 1 July 2025, for total superannuation balances over $3m, the 15% concessional tax rate applied to future earnings will increase to 30%. According to an initial media release, the tax would apply to ‘accumulation balances’, the fact sheet explains that it is a ‘total superannuation balance’ which includes amounts in retirement phase pensions. Continue reading this blog to know how it works and how the tax will be paid.
How will the expected 30% tax on super earnings over $3 million work?
Sper balances above $3m will be taxed at 30% from 1 July 2025. The calculation aims to spot the growth in total superannuation balances (TSB) over the financial year allowing for withdrawals and contributions. This method identifies unrealised and realised gains, allowing negative earnings can be carried forward and offset against upcoming years.
How will an individual pay tax?
Individuals can pay the tax personally or from their superannuation fund, and those with more than one account can nominate which fund will be used to pay the tax.
Reporting
Requirements for reporting on funds are not expected to change.
Much like Division 293 tax, the ATO will calculate tax on earnings. TSBs over $3m will be tested on 30 June 2026 for the first time along with the first notice of assessment likely to be issued to those affected in the 2026-27 financial year.
Proposed Earnings Calculation
Earnings calculation in a financial year:
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Earnings = TSB Current Financial Year – TSB Previous Financial Year + Withdrawals – Net Contributions |
Proportion of Earnings equivalent to funds over $3m:
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proportion of earnings = TSB Current Financial Year – $3m/TSB Current Financial Year |
Tax Liability:
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Tax Liability = 15 per cent* earnings*proportion of earning |
Examples:
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Balance over $3m John is 52 with $4m in superannuation on 30 June 2025. He doesn’t make any contributions or withdrawals. His balance has increased to $4.5m on 30 June 2026. It means John’s calculated earnings and tax liability are:
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Earnings Calculation Sam is retired and 69 years old. He has $9m in superannuation on 30 June 2025, which increases to $10m on 30 June 2026. He withdraws $150,000 during the year and doesn’t make additional contributions to the fund.
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Conclusion
The blog shares information on how the expected 30% tax on super earnings above $3m will work, how it will be paid, and how you can calculate proposed earnings. To know more about it, reach Reliable Melbourne Accountants.