How will the proposed 30% tax on super above $3m work?

The Government has announced that from 1 July 2025, the 15% concessional tax rate applied to future earnings for total superannuation balances (TSB) above $3 million will increase from 15% to 30%.

While the initial media release mentioned the tax would apply to ‘accumulation balances’, the fact sheet clarifies that it is ‘total superannuation balance’ which, based on its current definition, includes amounts in retirement phase pensions.

That way you can build your retirement wealth quicker by saving thousands of dollars more. As well as offering better features and flexibility, one of the other benefits of refinancing your SMSF loan is that you will be able to get a new SMSF loan that offers you more benefits.

How it will work.

An additional tax of 15% on earnings will apply to individuals with a TSB over $3 million at the end of a financial year.

The proposed calculation aims to capture growth in TSB over the financial year allowing for contributions and withdrawals. This method captures both realised and unrealised gains, enabling negative earnings can be carried forward and offset against future years.

The intent is to treat defined benefit interests in a similar way but no details are available as yet.

What’s next?

The proposal is exactly that for the time being. One the proposed enabling legislation is released, a consultation process will follow before it reaches Parliament. Once before the Parliament, it is really down to the Parliamentary process. Lacking a majority in the Senate, the Government will need the support of the Greens at least one more (assuming the Coalition don’t support the legislation).

The process is unlikely to be a smooth one and we might see further change before the legislation reaches its final configuration. The simple message is, be aware but don’t react.

Proposed earnings calculation

Earnings calculation in a financial year:

𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 = 𝑇𝑆𝐵𝐶𝑢𝑟𝑟𝑒𝑛𝑡𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑌𝑒𝑎𝑟 − 𝑇𝑆𝐵𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑌𝑒𝑎𝑟 + 𝑊𝑖𝑡ℎ𝑑𝑟𝑎𝑤𝑎𝑙𝑠 − 𝑁𝑒𝑡 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛𝑠

Proportion of earnings corresponding to funds above $3 million:

𝑃𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛 𝑜𝑓 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 =

𝑇𝑆𝐵𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑌𝑒𝑎𝑟 − $3 𝑚𝑖𝑙𝑙𝑖𝑜𝑛/

𝑇𝑆𝐵𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑌𝑒𝑎𝑟

Tax liability:

𝑇𝑎𝑥 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑦 = 15 𝑝𝑒𝑟 𝑐𝑒𝑛𝑡 × 𝐸𝑎𝑟𝑛𝑖𝑛𝑔𝑠 × 𝑃𝑟𝑜𝑝𝑜𝑟𝑡𝑖𝑜𝑛 𝑜𝑓 𝐸𝑎𝑟𝑛𝑖𝑛𝑔

Examples

Balance exceeding $3 million

Warren is 52 with $4 million in superannuation at 30 June 2025. He makes no contributions or withdrawals. By 30 June 2026 his balance has grown to $4.5 million.

This means Warrens’ calculated earnings and additional’ tax liability are:

Balance growth	$4.5 million - $4 million	= $500,000
Proportion of earnings > $3m	($4.5 million - $3 million) ÷ $4.5 million	= 33%
2025-26 tax liability	15% × $500,000 × 33%	= $24,750

Earnings calculation

Carlos is 69 and retired. His SMSF has a superannuation balance of $9 million on 30 June 2025, which grows to $10 million on 30 June 2026.

He draws down $150,000 during the year and makes no additional contributions to the fund.

Earnings calculation	$10 million - $9 million + $150,000	= $1.15 million
Proportion of earnings > $3m	($10 million - $3 million) ÷ $10 million	= 70%
2025-26 tax liability	15% × $1.15 million × 70%	= $120,750

Rethink what your money can do.

Our Smart Private Wealth financial advisers are SMSF experts. Have a chat to see how we can help you look at your superannuation and retirement planning differently.

Shannon Smit, Credit Representative No 533133 is a Credit Representative of SMART Business Solutions Mortgage & Lending Pty Ltd ACN 611 647 922.
SMART Business Solutions Mortgage & Lending Pty Ltd is a Corporate Authorised Representative of Outsource Financial Pty Ltd 384324.

How will the proposed 30% tax on super above $3m work?