What’s Changing with Super Tax on Large Balances
The government has revised its policy on taxing superannuation balances exceeding significant thresholds. Key updates include:
- Thresholds: Balances between A$3 million and A$10 million will be taxed at 30%, and balances above A$10 million will face a 40% rate on earnings. The tax rate remains 15% for most balances.
- No unrealised gains: Tax will apply only on realised returns — gains you actually sell or dispose of.
- Indexation: The thresholds will be adjusted for inflation going forward.
- Effective date delayed: The changes will begin from 1 July 2026.
- Low-income offset increased: The Low Income Superannuation Tax Offset (LISTO) will rise from A$500 to A$810, with expanded eligibility up to approximately A$45,000 income by 2027.
Impacts for High-Balance Super Owners
| Situation | What Happens Differently | Considerations & Strategy |
|---|---|---|
| You have A$4 million in super | Earnings above the standard rate (30%) taxed at higher rate for that portion above A$3 million | Spread contributions or distributions to avoid pushing into higher rate tier |
| Early retiree with large unrealised gains | Won’t be taxed until gains are realised — provides flexibility | Use timing of asset sales to your advantage, especially across years |
| Low-income earner under A$45,000 | You’ll benefit from the higher offset | Ensure your income is accurately reported to get LISTO benefits |
Actionable Tax Planning Tips
- Review asset types in super: Non-liquid assets (properties, private equity) may incur higher tax when sells occur — plan timing.
- Contribution timing: Delaying contributions into new financial year could defer exposure.
- Diversify investment vehicles outside super for amounts likely to exceed thresholds.
- Use market corrections: In years with downturns, realising losses could offset realized gains when sold later.
- Engage a financial planner or super specialist: Super changes have downstream effects on estate planning and concessional caps.
Example Scenario
Janet has a superannuation balance of A$5 million with earnings of A$300,000 in 2026-27. Under new rules, earnings on the first A$3 million stay taxed at standard rate; only the portion from A$3-A$5 million taxed at 30%. If she waits to realise gains or moves portions into non-super investment, she could reduce exposure.
By planning ahead of the 1 July 2026 effective date, and using opportunities to spread earnings, contributions, or realise gains strategically, high-balance super owners can reduce future tax liabilities.