Government Doubles Tax on Super Balances Over $3m.
Bruce Chisholm, our Principal Financial Planner shares his thoughts on this recent announcement…
Recently the government announced that from 1 July 2025 the tax on income within super on balances over $3m would double from the current 15% to 30%.
We will need to await regulations, as often the devil is in the detail.
In the interim, I thought I would share my thoughts.
Who will be affected?
Government figures suggest that 99.5% of those with super won’t be affected leaving 0.5% impacted.
How much extra tax will I pay?
I will assume that it is $3m per person, so a couple could have $6m combined in super before the extra 15% tax on the income of the fund kicks in. Let’s say a couple have a combined $1m over the allowable total. If you assumed 4% income (plus unrealised capital gains) then that would mean an extra $6,000 of tax paid by the superfund each year.
What can I do?
I would hope that those affected would already be reaping the great benefits from ongoing financial advice, so the first step would be to sit down with your adviser and do some forward planning.
Options include:
- Doing nothing and just cop the extra tax on the basis that the super structure remains more beneficial than the alternatives
- Consider cashing the excess from super and investing outside of super in other structures – but remember the super tax payable to do this.
Whilst no one likes extra tax, I would suggest that this one fits into the category of a nice problem to have.
I would be more concerned about one of our hidden “death duties” in Australia, being the 17% tax often paid on super benefits after death when left to non-dependents such as adult children. To put this in context, our client above could pay up to $1,190,000 (yes that’s right; that figure isn’t a typo!) tax after death!
This doesn’t affect just 0.5% of those with super, it is an issue for 100% of those with super!
If you’d like to speak with me about what you could do, or are keen to book a Discovery Meeting, please send me an email and we can discuss, bruce@highview.com.au.
Bruce Chisholm
Principal Financial Planner
Authorised Representative No. 1235025 of Akambo Pty Ltd t/a Accountants Private Advice Licence 322056 Highview Wealth Solutions Pty Ltd Trading as Highview Accounting & Financial
DISCLAIMER: Bruce has written his article for general information purposes only and it does not constitute personal advice. This information has been prepared without considering any individual’s objectives, financial situation or needs. You should not act solely on the basis of material contained in this article. We recommend that formal advice is sought which considers all your individual objectives and needs.