Changes announced to superannuation fund balances above $3m
Recently, the Australian Government announced the upcoming changes to tax concessions for superannuation balances above $3 million.
What does this mean for you?
There is no current impact for your superannuation fund. This announcement is a proposal only and is required to go through the parliamentary process before it is approved. If approved, the changes are proposed to commence on 1 July 2025 and is limited to those individuals who have more than $3 million in super at the end of a financial year. Therefore, it’s the balance at 30 June 2026 that matters initially. It should be noted that it’s $3 million per person, not per fund. The $3 million will however include all of a member’s super, ie both their pension and accumulation accounts combined.
How will the earnings and tax be calculated?
According to the factsheet released by Treasury, for people subject to the new rules there are three essential elements:
For those familiar with “Division 293” tax, the last two elements will feel familiar as this is how this additional tax is also managed.
The two key terms in the proposal are those in bold above – just some of the fund’s earnings will be taxed and earnings for this purpose has a special definition. Formulas and examples have been provided outlining how the calculations will work, but will include details such as opening balance, closing balance, contributions and pension payments. At this stage it has been stated that earnings will not only include the income a super fund would normally pay tax on – things like interest, rent, dividends or capital gains on assets it’s actually sold; but also growth in assets that the fund hasn’t yet sold. This is the area that seems most contentious and will require specialist advice on how to manage if affected.
How Boyce can help
At Boyce, we are committed to providing you with the latest information and advice on government legislation and its impact on your financial situation. As stated above, this announcement is a proposal only and is required to go through the parliamentary process before it is approved. As further details emerge we will provide updates via our e-alerts or direct contact.
If you would like more information or if you have any questions relating to this proposed change or your superannuation fund in general, please contact your Boyce accounting team who can connect you with one of our superannuation or financial planning specialists.
Recently, the Australian Government announced the upcoming changes to tax concessions for superannuation balances above $3 million.
