Tax Planning
Optimising Tax for Super Balances Above $3 Million: Planning Super Concessions from 2026
From 1 July 2025, superannuation earnings above $3 million face tighter concessions. Here's how high-net-worth individuals can restructure and plan ahead.
By NomadicTax Research Team • 5-8 min read • May 21, 2026
## Understanding the Better Targeted Superannuation Concessions
In the Australian **May 2024 Budget**, the government introduced reforms called **Better Targeted Superannuation Concessions**. From **1 July 2025**, individuals with a *total super balance (TSB)* exceeding **AU$3 million** at the end of the financial year will face reduced tax concessions on the portion of earnings above this threshold. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/non-arm-s-length-income-changes-for-superannuation-funds?utm_source=openai))
### Key Details
- Earnings on super balances **up to** $3 million continue under normal concession rules. Above that, **future earnings** will be subject to a **higher tax rate**. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
- These changes are **pending legislation**, meaning they are proposed but not yet fully law. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
## Planning Strategies for High Super Balances
Here’s what individuals with large super balances can do:
| Strategy | How It Helps | Action Steps |
|---|---|---|
| Maintain balances just under $3 million | Avoids higher taxation on earnings above threshold | Regularly review and withdraw (where permitted) small excess amounts into other investment vehicles |
| Use diversified investment structures | Spread assets between super and non-super investments to manage tax exposure | Speak to an adviser about trusts, investment property, or portfolios outside super |
| Time contributions | Make concessional or non-concessional contributions in profitable years to maximise concessions within the threshold | Project earnings and use contribution caps effectively |
## Example
Sarah has a TSB of $3.5 million. Under the new rules, earnings on the first $3 million are taxed as usual. Earnings on $500,000 above the threshold will face the new, less favourable rate. To reduce exposure, she might redirect some gains into a personal investment portfolio outside super or make withdrawals (if compliant) before the balance is assessed.
## Compliance Considerations
- **Legislation status**: Keep an eye out — this measure is still **pending legislation**. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
- **Assessment date**: The TSB is measured at **end of each financial year**. So decisions just before 30 June could count.
- **Investment structure risk**: Changing structure may involve trust law, CGT implications, or other compliance costs.
## Actionable Insights
1. Review your super balance annually and forecast when you might cross the threshold.
2. Explore alternative investments for returns expected above the $3 million threshold.
3. Consult a tax professional specializing in superannuation and high-net-worth individuals to evaluate your entire tax position.
4. Monitor legislative progress for the final rates and enforcement details.
_This reform is **Effective from 1 July 2025**, with assessments first at the end of financial years thereafter._