Understanding the Revised Superannuation Tax Structure starting 1 July 2026
Australia is introducing a tiered tax on earnings for superannuation balances to target high-balance accounts while improving fairness across the system. Key changes include:
- Balances between A$3 million and A$10 million will face a new tax rate totalling 30% on earnings above the A$3 million threshold. (reuters.com)
- Balances above A$10 million will be taxed at 40% on earnings exceeding that level. (reuters.com)
This replaces earlier proposals to tax both realised and unrealised gains without indexation. The revised rules will apply only to realised earnings (dividends, interest, capital gains once sold) and introduce indexation of thresholds to inflation. (reuters.com)
Who Is Affected
- Approximately 0.5% of super fund members, around 80,000 people, will be impacted by the new tax tiers. (reuters.com)
- A very small number—about 8,000 Australians—with super balances exceeding A$10 million will face the 40% rate. (reuters.com)
Low-Income Adjustment: LISTO Improvements
To counterbalance impacts on high-balance accounts, updates are being made for low-income earners via LISTO (Low Income Superannuation Tax Offset):
- Eligibility income threshold raised from A$37,000 to A$45,000 starting 1 July 2027. (theguardian.com)
- Maximum LISTO payment increased from A$500 to A$810 per year. (theguardian.com)
- About 1.3 million Australians, predominantly women, will benefit from this change. (reuters.com)
Actionable Strategies
- Review your total super balance: If you're close to the A$3 million or A$10 million thresholds, begin assessing potential exposure.
- Time realisations carefully: Since tax applies only to realised earnings, delaying the sale of assets with large gains may reduce exposure.
- Maximise concessional contributions: If you’re in a lower balance tier, focus on making use of concessional contribution limits before thresholds apply.
- Explore pension-phase strategies: Earnings in pension phase accounts are generally taxed at 0%. Transiting to pension phase may offer benefits under certain conditions.
Example Scenario
Suppose Pat has A$4 million in super on 30 June 2026. Earnings from A$0–3 million are taxed at current rules (15%, or 0% if in pension phase). Earnings on the A$1 million that exceeds the A$3 million threshold will be taxed at 30%.
If Taylor has A$12 million, earnings above A$10 million will be taxed at 40%. This means earnings between A$3–10 million are taxed at 30%, and the earnings beyond A$10 million hit by the steeper rate.
Legislative & Timing Considerations
- These changes are not yet law; legislation must pass to enact them. (industrysuper.com)
- The effective date is 1 July 2026, giving stakeholders time to plan. (reuters.com)
Final Thoughts
The new superannuation reforms aim to ensure equity—raising taxes only on earnings from large super balances (above A$3M and A$10M), excluding unrealised gains, and boosting benefits for lower-income workers. If you stand to be affected, early financial consultation, rebalancing assets or timing realisations can help mitigate higher tax impacts.