The Australian Super system is designed to help Australians save money that they can access in retirement. Superannuation is an investment environment designed specifically to help you save for your retirement.

By now you may have may have seen in the media that Labor have introduced a new bill into parliament.

On 28 February 2023, the government announced from 1 July 2025 a 30% concessional tax rate will be applied to future earnings for superannuation balances above $3 million.

This is not yet law.

Individuals with balances over 3 million will be subject to an additional tax of 15 percent on the earnings on any balance that exceeds the $3 million threshold.

This tax is in addition to any tax their superannuation funds pay on earnings in accumulation.

The tax only applies to the proportion of earnings corresponding to balances above $3 million. This means that earnings corresponding to funds below $3 million will continue to be taxed at 15 per cent or less.

A summary of the calculation is :

1. Earnings are calculated by reference to the difference in total superannuation balances at the start and end of the income year, adjusted for withdrawals and contributions.
2. Years with negative movements in total superannuation balances will result in a carry forward credit to be offset against future positive movements.
3. Individuals will have the choice to pay the tax out-of-pocket or from their superannuation funds.
4. Individuals who hold multiple superannuation funds can elect where the tax is paid from.
5. This tax is similar to the existing Div 293 tax, in the sense that it is separate to your personal income tax.

Total superannuation balances in excess of $3 million will be tested for the first time on 30 June 2026, with the first notices of a tax liability expected to be issued to individuals in the 2026-27 financial year.

Superannuation is still with tax on earnings in retirement…

Superannuation is complex, so having an adviser enables you to make the right decisions based on your circumstances. An advisor will help you to meet your investment goals and provide advice on making super contributions.

The 3 main benefits of Super are:

1. Your employer will make regular contributions to your account, currently worth 10.5% of your ‘Ordinary times earnings’. You are able to make additional contributions to your own super balance
2. It will provide a valuable source of cash in retirement. Any investment earnings will only be taxed at 15%.
3. If you are over 60 any benefits that are paid to you are tax-free and not assessable for income tax purposes.

Please note this is yet to be passed as law and further information will be released.