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Just 80,000 will be hit by the impost which “does not change the fundamentals of the system”.
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Government doubles tax on super balances above $3m
28 February 2023
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The government will tax earnings on super balances over $3 million at 30 per cent from 2025 the Treasurer and Prime Minister confirmed today after weeks of speculation about changes to the concessions.
The move doubles the standard 15 per cent tax on super earnings and is expected to hit about 80,000 Australians.
The revised impost will begin on 1 July 2025, just after the next federal election.
Prime Minister Anthony Albanese said the reform would “strengthen the system by making it more sustainable”.
“The savings that are made from this … will contribute $900 million to the bottom line of the forward estimates and some $2 billion when it is operating over the full year period,” he said.
“This proposed change does not change the fundamentals of our superannuation system – 99.5 per cent of people with superannuation will be unaffected by this reform.”
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This announcement follows the release of Treasury’s consultation on the objective of superannuation last week.
Treasurer Jim Chalmers said there was no plans at this stage for the $3 million cap to be subject to indexation.
“Since coming to government, we’ve been up‑front about the challenges facing the economy and the budget,” the Treasurer said.
“We inherited $1 trillion of debt as well as growing spending pressures in defence, health, aged care and the NDIS.
“These challenges mean we need to make responsible budget choices to ensure generous superannuation tax breaks are better targeted and sustainable.
“Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent. This will continue for all superannuation accounts with balances below $3 million.
“From 2025–26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.”
He said those affected by the increase would continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.
“This adjustment does not impose a limit on the size of superannuation account balances in the accumulation phase. And it applies to future earnings – it is not retrospective.”
“This modest adjustment is consistent with the government’s proposed objective of superannuation, to deliver income for a dignified retirement in an equitable and sustainable way.”
He said the government would introduce enabling legislation as soon as practicable and would undertake further consultation with the superannuation industry on implementation of the measure.
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