Tax Planning
Strategic Superannuation Planning for High-Balance Australians Ahead of July 2025 Changes
With tax concessions being reduced for accounts holding more than $3 million from 1 July 2025, those with high super balances need proactive planning to manage their tax. This article offers strategies to minimise tax exposure and maintain retirement goals.
By NomadicTax Research Team • 5-8 min read • November 22, 2025
## Understanding the Upcoming Super Tax Concession Change
Starting **1 July 2025**, individuals whose **total superannuation balance (TSB) exceeds $3 million** at the end of a financial year will face **reduced tax concessions** on earnings above that threshold. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/tax-treatment-of-invalidity-pensions?utm_source=openai)) This measure—the *Better Targeted Superannuation Concessions* reform—affects a small slice of Australians (roughly 0.5%) but significantly impacts those nearing or above the $3 million mark. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stewardship-groups-key-messages/private-groups-stewardship-group/private-groups-stewardship-group-key-messages-18-september-2023?utm_source=openai))
## Actionable Strategies Before the Threshold Hit
- Monitor your TSB annually and project forward: include both accumulation and defined benefit components. If you expect your balance to cross $3 million, plan distribution or asset allocation changes beforehand.
- Redirect growth into tax-efficient assets: income-producing investments inside super will be taxed at a higher combined rate once the threshold is exceeded. Consider tax-free or lower-tax assets outside super or using pension phase assets if eligible.
- Explore phased pension strategies: Drawing pension incomes can shift funds out of accumulation; if done tactically, this may reduce your accumulation balance below $3 million while maintaining income. Consider timing of pension commencements relative to financial year-end.
## Real Example: Jack’s Super Strategy
Jack is 62 with a TSB of $2.9 million at 30 June 2025. He expects strong market gains pushing him past $3 million by June 2026. He considers topping up a defined benefit pension stream before 30 June 2025 and starting an account-based pension to start converting assets. This reduces his TSB while meeting income needs. Jack also slows additional contributions until balance falls below the threshold and shifts income-yielding assets into trusts outside super for tax planning.
## Risks & Compliance Considerations
- Valuation issues for defined benefit interests: These are treated differently. Defined benefit interests will also receive “commensurate treatment” under the reforms. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/individuals/personal-income-tax-new-tax-cuts-for-every-australian-taxpayer?utm_source=openai))
- Accurate reporting: your fund must report earnings correctly. Misreporting can attract penalties.
- Timing is critical: All decisions to reduce super balance exposure should align with financial year ends (30 June) to ensure correct calculation.
## Bottom Line
If your super balance is close to $3 million, start planning now. Use pension transitions, adjust allocations, and consider drawing income streams strategically. While only a small group is affected, the difference in tax on earnings above the threshold is substantial and could impact retirement outcomes significantly.