Proposed Super Tax on Balances Over $3 Million: What You Need to Know
The Federal Government has proposed a new tax for individuals with superannuation balances over $3 million, set to begin 1 July 2025.
It is not law yet. But with draft legislation already introduced to Parliament, it is likely to go ahead in some form.
Here is what you need to know, and what to think about now.
What’s Proposed
Under the draft law, individuals with more than $3 million in super would pay an extra 15% tax on earnings linked to the portion over $3 million.
That brings the total tax on that portion to 30%.
Key points:
Applies to all super types: industry, retail and SMSFs
Based on your total balance across all funds
Includes unrealised gains
The ATO will issue a personal tax assessment for it
Status of the $3 Million Super Tax (as at June 2025)
Proposal announced: February 2023
Intended start date: 1 July 2025
Current status: Still a proposal — not yet passed into law
Draft legislation released: Yes (August 2023)
Bill introduced to Parliament: Yes (October 2023)
Passed by Parliament: No, not yet
When Will It Start
If it passes, the tax starts from 1 July 2025.
As of today, it is still not legislated. That means:
It could be blocked, delayed or amended
The $3 million cap might change
The method for calculating earnings might be revised
How It Would Be Calculated
Based on the draft bill, the ATO will measure your total super balance at the start and end of each financial year.
The formula looks like this:
Earnings = (Closing balance – Opening balance) – Net contributions/withdrawals
Proportion = Balance over $3M ÷ Total balance
Taxable earnings = Earnings × Proportion
Tax = 15% of taxable earnings
Example:
Opening balance: $4 million
Closing balance: $4.4 million
No contributions or withdrawals
Earnings: $400,000
Proportion above cap: $1M / $4.4M = 22.7%
Taxable amount: $400,000 × 22.7% = $90,909
Tax payable: 15% of that = $13,636
Why It Matters Even If You Are Not Over the Cap Yet
The cap is not indexed. So more people will be impacted over time. This is especially true if:
You hold property in your SMSF
You are still contributing heavily
Your fund has a long-term growth strategy
What You Can Do Now
You do not need to act just yet. But it is smart to prepare.
Project your balance beyond retirement
Review how your super is structured
Consider investment options outside of super
Talk to your adviser early
Need Help
If your super is already above $3 million, or trending that way, now is the time to start planning. We are helping clients review strategies and assess alternative structures.
Disclaimer: This content provides general information only, current at the time of production. Any advice in it has been prepared without taking into account your personal circumstances. You should seek professional advice before acting on any material.