Treasury has released an information sheet on how the new “30% tax rate” for super balances over $3 million will work.

In simple terms it will not be a tax on the income of the super fund but rather a tax on increases in account balances (including unrealised gains). Also, the assessment will be issued to the member (not the super fund). You will have the choice of either paying that out of your own pocket or withdrawing some or all of that amount out of the super fund.

The proposed measure also has a “progressive” element to it, so that no one will actually pay an additional 15%, rather it will be something less than that. So, for example, 3 members each have an increase in their total super balance of $100K:

The first member has $3m in super, they will pay tax of $500 - an effective tax rate of 0.5%.
The second member has $10m in super, they will pay tax of $10,500 - an effective tax rate of 10.5%.
The third member has $100m in super, they will pay tax of $14,550 - an effective tax rate of 14.55%.

The measure is due to start from 1 July 2025, so super funds and members will have time to consider their options. This could include:

Removing benefits below the $3m limit – although members would need to consider this carefully as the position outside of super could be worse
Whether super funds (SMSFs) look to record their member balances on a net tax position
Whether illiquid super funds look to increase their liquidity to pay for tax under this measure (particularly on unrealised gains)
Where couples are aged 60+ and have unequal balances, whether they should withdraw super from one of the couple’s account and contribute it into the other’s account (subject to contribution caps)

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Jan Harnischmacher
Lawyer
T +61 3 9611 0158
E jharnischmacher@sladen.com.au