Tax Planning

Maximising Your Super Under the Better-Targeted Super Concessions (BTSC) Reform

New rules from 1 July 2025 reduce tax concessions for individuals with large super balances—understanding how BTSC works can save you thousands.

By NomadicTax Research Team • 5-8 min read • March 9, 2026

## What is BTSC? Better-Targeted Super Concessions (BTSC) is a reform that redefines how much tax‐favourable treatment you receive in superannuation if you have a **Total Super Balance (TSB)** exceeding $3 million. From **1 July 2025**, excess earnings beyond the $3 million threshold are taxed at higher rates. ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-86d08b33-f4df-42b1-b4e5-6ae70054517c?utm_source=openai)) ## How the TSB is Calculated Under the New Measure The “Total Super Balance” includes: - All accumulation phase interests; - Transfer balance amounts where relevant; - Defined benefit interests calculated under new valuation methods for applicable funds. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai)) Funds and SMSFs will need to report additional data under Div 296 via bulk data exchange or via new labels on the SMSF annual return so the ATO can administer the tax correctly. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai)) ## Practical Planning Tips - **Monitor your TSB closely**: ensure that you know your total across all your super interests—accumulation, retirement, defined benefits. - **Evaluate investment options**: investments held outside super or structured differently may offer more tax efficiency if your TSB is about to exceed $3 million. - **Consider phased retirement** strategies to reduce accumulation interests in high taxing categories. ## Example Jessica’s TSB at 30 June 2025 is $2.9 million, and during 2025–26 she earns $500,000 in earnings in accumulation phase. Since her balance exceeds $3 million, BTSC applies: only the earnings on the portion over $3 million — that is, earnings on $400,000 — are taxed at the higher rate. Earnings on the first $3 million continue under existing concessional rules. Funds will need to collect and report the excess earnings for BTSC tax. ## How SMSFs Differ - SMSFs will report using **two new labels** on the SMSF annual return. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai)) - The valuation of defined benefit interests under certain funds is more complex and may require actuarial input. Industry stakeholders have raised concerns about system readiness. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai)) ## When and How It Takes Effect - BTSC applies **from 1 July 2025** for individuals with TSB over $3 million. Law is enacted (or very close). ([ato.gov.au](https://www.ato.gov.au/api/public/content/0-86d08b33-f4df-42b1-b4e5-6ae70054517c?utm_source=openai)) - ATO is providing guidance and working with the super industry to build compliance systems. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/superannuation-administration-group/superannuation-administration-group-key-messages-17-june-2025?utm_source=openai)) ## Action Checklist - If you expect your super balance to approach or exceed $3 million, talk to your adviser now to assess impact. - Super funds and SMSFs should ensure their reporting systems are adjusted for new labels and data collection. - Defined benefit scheme members should obtain valuations under the new method, especially if their benefits or portability may be impacted. BTSC represents one of the more consequential changes to super taxation in recent years—act soon if it may affect you.