Reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025.
The Government will reduce the tax concessions available to individuals with a total superannuation balance exceeding $3 million, from 1 July 2025. Individuals with a total superannuation balance of less than $3 million will not be affected. This reform is intended to ensure generous superannuation concessions are better targeted and sustainable. It will bring the headline tax rate to 30 per cent, up from 15 per cent, for earnings corresponding to the proportion of an individual's total superannuation balance that is greater than $3 million. This rate remains lower than the top marginal tax rate of 45 per cent. Earnings relating to assets below the $3 million threshold will continue to be taxed at 15 per cent or zero per cent if held in a retirement pension account. Interests in defined benefit schemes will be appropriately valued and will have earnings taxed under this measure in a similar way to other interests. This will ensure commensurate treatment. The additional tax on earnings imposed by this measure will impact around 80,000 individuals in 2025-26, or approximately 0.5 per cent of individuals with a superannuation account. The measure will not place a limit on the amount of money an individual can hold in superannuation. The current contributions rules continue to apply. This measure is estimated to increase receipts by $950.0 million and increase payments by $47.6 million over the 5 years from 2022-23. This includes $50.0 million in receipts associated with updating the notional contribution calculation methodology, applicable to all defined benefit members. In 2027-28, the first full year of receipts collection, the measure is expected to increase receipts by $2.3 billion. This measure is consistent with the Government's proposed objective of superannuation, to deliver income for a dignified retirement in an equitable and sustainable way.