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Government consults on $3m super tax legislation

By Reporter
3 minute read

The government is consulting on draft legislation that is set to double the tax rate on earnings from superannuation balances above $3 million.

The Albanese government has published draft legislation on its plan to reduce the tax concessions available to individuals with superannuation balances above $3 million.

Under the draft legislation, which was put up for consultation on Tuesday, the tax rate on earnings from total super balances (TSB) above $3 million will double to 30 per cent, while earnings on super balances below $3 million will continue to be taxed at 15 per cent.

“The bills reduce the tax concessions by imposing a tax of 15 per cent on certain earnings based on the percentage of the TSB exceeding the $3 million threshold,” the government said in explanatory materials accompanying the draft legislation.


“The tax is imposed directly on the individual and is separate from the tax arrangements of the superannuation fund or scheme.”

The changes are set to take effect from the 2025–26 financial year and were originally unveiled by the Treasurer in February before being included in the federal budget in May.

Around 80,000 people, or approximately 0.5 per cent of Australians with a super account in the 2025–26 income year, are expected to be impacted.

According to the budget, the measure is estimated to increase receipts by $950.0 million and increase payments by $47.6 million over five years from 2022–23. In 2027–28, the first full year of receipts collection, the measure is expected to increase receipts by $2.3 billion.

In the explanatory materials, the government said it was making Australia’s super system “more sustainable and fairer through a modest change to ensure generous superannuation tax breaks are better targeted”.

Additionally, the government suggested that the changes are consistent with its proposed objective of superannuation “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.

“It will still provide concessions to save for retirement through superannuation whilst improving the equity of the superannuation system and its fiscal sustainability over time through limiting the level of taxpayer support available to a small number of individuals with large balances.”

Consultation on the draft legislation will remain open until 18 October.

Last month, the Greens indicated they would use their Senate balance of power to hold up the changes until the government agrees to pay super on paid parental leave.