Tax Planning
Superannuation Concessions Trimmed: What High-Balance Australians Must Know Now
From July 2025, Australians with superannuation balances above $3 million face new tax on earnings — this article explains exactly how it will work and how to prepare.
By NomadicTax Research Team • 6 min read • November 22, 2025
## What Are the Changes?
The Australian Government’s Better Targeted Superannuation Concessions (BTSC) is set to start from **1 July 2025**. Individuals whose **total superannuation balance (TSB)** exceeds **AU$3 million** at the end of each financial year will have **earnings above that threshold taxed at 30% overall**. This tax consists of a **15% concessional rate by the fund, plus an additional 15% known as **Division 296 tax** charged to the individual. ([ato.gov.au](https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions?utm_source=openai))
## Who’s Affected?
- Less than **0.5%** of super account holders, namely those with balances over AU$3 million. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stewardship-groups-key-messages/tax-practitioner-stewardship-group/tpsg-key-messages-22-august-2023?utm_source=openai))
- Applies across **all fund types**, including APRA-regulated funds, SMSFs, and defined benefit interests in accumulation phase. Individuals with funds in accumulation phase receive a **Notice of Assessment** from the ATO. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/smsf-auditors-professional-association-stakeholder-group/smsf-auditors-professional-association-stakeholder-group-key-messages-8-july-2025?utm_source=openai))
## Important Dates
| Item | Date / Period |
|---|---|
| Measure effective | 1 July 2025 |
| First income year of tax application | 2025-26 financial year |
| Balance measurement for any excess | TSB as at 30 June 2025 for threshold comparison |
## How Does Division 296 Work?
- **Earnings over threshold**: Only portion of earnings (interest, dividends, capital gains) related to balance exceeding AU$3 million is impacted.
- **Separate tax liability**: The Division 296 tax is payable by the individual **84 days after their Notice of Assessment**. Funds may release money via a release authority if you don’t pay. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/smsf-auditors-professional-association-stakeholder-group/smsf-auditors-professional-association-stakeholder-group-key-messages-8-july-2025?utm_source=openai))
- **Special treatment for defined benefit interests**: If earnings relate to defined benefit interest, the tax may be **deferred** until after the first benefit payment, depending on event. ([ato.gov.au](https://www.ato.gov.au/about-ato/consultation/in-detail/stakeholder-relationship-groups-key-messages/smsf-auditors-professional-association-stakeholder-group/smsf-auditors-professional-association-stakeholder-group-key-messages-8-july-2025?utm_source=openai))
## Real-World Example
Suppose Jane has a super fund with **AU$3.5 million** at 30 June 2025. During the 2025-26 year, her fund earns 8% overall, but only the earnings attributable to the excess **AU$500,000** (i.e. approximately **AU$40,000**) will face the added tax. She’ll receive an ATO Notice of Assessment, and must pay the Division 296 portion unless she elects to use her fund’s release authority.
## Actionable Insights: What to Do Now
- **Check your super balance** before 30 June 2025. If near AU$3 million, consider strategies to manage earnings or distributions.
- **Engage your fund or financial advisor** to ensure your fund can deliver accurate data for TSB, including for defined benefit schemes.
- **Prepare for payment of the tax**: understand whether you'll pay directly or via release authority. Know the deadlines (84 days).
- **Explore relief options**: If you have negative earnings or underperforming years, these may offset earnings for future years.
## Bottom Line
While BTSC will only impact a small portion of Australians, for those with high balances it's a material change. Start early, verify balances and earnings, and ensure your super fund's reporting systems are ready. With correct planning, compliance won’t be painful — but waiting till the last minute could cost you.