Currently, all superannuation fund income is taxed at either 15% or 10% on gains on capital assets that have been held by the fund for more than 12 months. The draft legislation, if enacted will introduce an additional tax of 15% on superannuation earnings but only for those individuals with a total superannuation balance (TSB) over $3 million at the end of a financial year. These changes are proposed to apply from 1 July 2025, with the first tax liabilities to be sent to affected members sometime in 2026-2027.
While not a concern for the average worker, if enacted, those with significant property or other illiquid assets in their superannuation fund are most at risk, for example farmers and business operators who own their business property in their self-managed superannuation fund (SMSF).
The issue is how the tax is calculated. The tax captures the growth in the balance of a member’s superannuation over the financial year (allowing for contributions and withdrawals). It captures both:
- Realised gains from the sale of assets, and
- Unrealised gains triggered by an increase in the value of superannuation assets. For example, if the value of a property increases.
If the member’s total super balance has decreased - the loss can be offset against future years.
The Australian Taxation Office (ATO) will calculate the tax each year. Members with balances in excess of $3 million will be tested for the first time on 30 June 2026, with the first notice of assessment expected to be issued to those impacted in the 2026-2027 financial year.
If you are likely to be impacted by the impending new tax, it is important to speak to your financial adviser. While keeping assets within superannuation will remain the best option for many from a tax and planning perspective, it’s important to ensure that you’re in the best possible position.