Tax Planning
Maximising Super with Better-Targeted Concessions: What High Balance Holders Need to Know
Australia’s proposed superannuation changes may reshape how earnings on large balances are taxed. If you hold over A$3 million in super, there are urgent planning moves to consider.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## Overview of the Policy Change
Australia is set to introduce **Better-Targeted Superannuation Concessions**, which will reduce tax concessions on certain earnings for super balances above **A$3 million**, effective from **1 July 2025**. The new rules impose a **30% tax rate on earnings** of super balances above the threshold. This was announced in Budget-related legislation but **has not yet become law**. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
That means individuals with large super balances face a higher tax on investment earnings going forward. **Earnings below the A$3 million balance will continue under existing concession rates**—this change affects only the portion above the threshold. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
## Implications and Planning Strategies
If you expect your super balance to approach or exceed A$3 million, these changes could significantly impact after-tax returns. Here are steps to cushion the impact:
- **Review your investment mix**: Earnings taxed at 30% will erode returns more sharply. Consider shifting a part of your portfolio toward lower-volatility or income sources where possible, and reduce reliance on high turnover assets whose gains may be taxed heavily.
- **Timing matters**: Because the concessional rate kicks in after 1 July 2025, delaying certain earnings, or planning contributions or withdrawals before that date (where legal) may help minimize exposure.
- **Balancing liquidity and tax**: Large super funds often allow access to funds via pension phases or income streams. Structuring withdrawals may reduce the amount of earnings sitting inside super where concession rates will be reduced.
- **Use of non-super investment vehicles**: For surplus capital beyond what you expect you’ll need inside super, investments like managed funds, real estate, or trusts may provide greater flexibility, though they also come with their own tax treatment and risks.
## Practical Example
Imagine Jane has a current super balance of **A$2.8 million**, growing at **5% annual return**. Under current concessions, her earnings taxed at, say, 15% yield more net income. If she earns **A$200,000** before 30 June 2025, all taxed under concessial rates. After 1 July, earnings on amounts above **A$3 million** (say her portfolio grows) will face **30% taxation**. So, if her earnings above threshold amount to A$50,000, she’ll pay extra tax compared to today.
By moving some of those assets into a balanced portfolio or withdrawing to an allocated pension, she could limit the portion above the threshold and thus exposure to higher rates.
## Key Takeaways
- The change is **effective 1 July 2025**, and it’s **proposed law**, not yet enacted. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
- Only earnings on amounts **above A$3 million** super balance are affected.
- This hits those with serious savings; lower and middle super balances unaffected.
- Early planning (diversifying, timing, alternative vehicles) can mitigate the financial impact.
## What to Watch For
- Monitoring when the legislation passes (or if amendments occur).
- Tracking your super balance as it grows.
- Ensuring record-keeping and advice from a financial planner or tax specialist for tailored strategy.
- How this change interplays with other tax changes, like personal income tax cuts and Medicare levy threshold increases.
**Final thought**: If you are likely to cross the A$3 million super threshold or already exceed it, this policy could materially change your tax profile. Proactive repositioning and strategic withdrawals may make a measurable difference in your net after-tax returns.