The Government recently introduced two Bills into Parliament that (among other things) introduce the new tax for superannuation balances exceeding $3 million (the Government’s consultation about this was discussed in last November’s edition of Voice).
Assuming the Bills become law, from the 2026 income year onwards, the headline concessional tax rates applying to superannuation earnings will be:
– Up to 15% on earnings on superannuation balances $3 million and below; and
– Up to an overall 30% on a percentage of earnings equal to the percentage of the individual’s total superannuation balance (‘TSB’) above $3 million.
That is, the amendments will reduce the superannuation tax concessions by imposing a tax of 15% on certain “earnings” based on the percentage of the TSB exceeding the $3 million threshold. The tax is imposed directly on the individual and is separate from the tax arrangements of the superannuation fund.
Negative superannuation earnings from balances above $3 million will be carried forward and used to reduce the amount of superannuation earnings subject to the proposed new tax in future income years.
The Bills also amend existing legislation to include provisions relating to the calculation of earnings, withdrawals and contributions, and changes to the definition of TSB.
The above measures are not yet law and are subject to the passage of the legislation.