Tax Planning
Super Funds with Over $3 Million: How Better-Targeted Concessions Change Your Strategy
From 1 July 2025 high-balance superannuation accounts will face reduced tax concessions—balancing fairness and fiscal sustainability, with major implications for retirement planning.
By NomadicTax Research Team • 5-8 min read • November 24, 2025
## What the 'Better Targeted Superannuation Concessions' Are
The Australian Government has proposed legislation introducing a **30% concessional tax rate** on *future earnings* for superannuation balances exceeding $3 million starting from **1 July 2025**. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai)) These reforms aim to adjust tax concessions for high-balance super funds to reflect the accelerating growth of superannuation savings among high net-worth individuals.
As of now, the law is still proposed and yet to pass through all stages, though the timeline is clearly set. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
## Who This Affects — Real-World Scenarios
- **Mary**, aged 55, has a super balance of $3.5 million invested in a diversified portfolio. Under the current system, her earnings (dividends, interest, rent, capital gains) are taxed at the **concessional rate of 15%**, including capital gains discount. Under the new rule, earnings above the threshold will instead be taxed at **30%**, drastically reducing returns on high-balance segments.
- **Small-balance members** are unaffected unless their entire balance pushes past $3 million. Most retirement savers won’t need to restructure their portfolios unless they are already near or above this threshold.
## Strategies to Preserve Value
- **Segmentation approach**: Keep portions of your super that are under $3 million earning lower-tax rate exposure (e.g., growth assets), and concentrate passive or slower growth assets in amounts expected to exceed this threshold.
- **Time-based planning**: Delay large contributions until after July 1, 2025 when you better understand costings; conversely, front-load eligible contributions or avoid withdrawals that reduce flexibility.
- **Investment mix review**: Under the higher 30% rate, high turnover or high dividend-yield strategies become more expensive. Consider favouring growth-oriented assets with capital appreciation over income in taxed portions.
- **Maximise non-concessional contributions**: For those under thresholds, making non-concessional contributions away from concessional pools helps avoid higher rates on earnings above the $3 million cap.
## Implications for Retirement Planning
- **Long term value erosion**: Over years, the extra taxation at 30% can erode compounding returns significantly for high-balance accounts.
- **Estate planning and withdrawal timing**: Managing account balance thresholds at times of capital withdrawals or death benefits becomes more important to avoid pushing beneficiaries into higher-tax categories.
- **Compliance and reporting**: Super funds will need updated systems to separate earnings by balance thresholds. Trustees should prepare now to track and report according to law once it becomes effective.
## Action Items Now
- Check your current superannuation balance and projection toward or above $3 million.
- Consult your super fund or adviser about likely system changes and whether your investment allocations make sense under the new regime.
- Keep a close eye on the legislative process—if amendments occur, they may affect implementation details like how earnings are segmented, what types of income are included, and whether any grandfathering or exemptions apply.
## Conclusion
These better-targeted concessions reflect a shift toward more progressive treatment of super earnings and provide clear signals to high-balance fund members: **planning now is better than reacting later**. Armed with the right strategy, individuals can mitigate risk, preserve value, and navigate toward a more sustainable retirement nest egg under Australia’s evolving super tax landscape.