From 1 July 2025, the wealthiest Australians could pay more tax on their Superannuation. Prime Minister Anthony Albanese has announced that the government plans to introduce a new cap for Superannuation which would see the earnings on super balances above $3 million taxed at a concessional rate of 30 per cent, rather than 15 per cent.
The government periodically reviews the taxation of Superannuation as part of its broader policy settings. The change is set to occur on 1 July 2025, after the next Federal election, and would affect around 80,000 people. This adjustment does not impose a limit on the size of Superannuation account balances in the accumulation phase, and it applies to future earnings.
“This proposal does not change the fundamentals of our superannuation system. This reform will strengthen the system by making it more sustainable.” Albanese said.
Treasurer Jim Chalmers has indicated that at this stage there is no intention to apply indexation to the $3 million cap.
In Australia, the earnings generated within Superannuation accounts are taxed at a concessional rate of 15%. This can be generally lower than the marginal tax rates that individuals pay on their income outside of Superannuation funds.
If the tax on super earnings over $3 million were to double from 15% to 30% in two years' time, this would mean that individuals with very large superannuation balances may pay a higher rate of tax on their investment earnings within their Superannuation accounts than otherwise necessary. This may impact their retirement planning and investment strategies into the long term and sustaining the lifestyle they were working towards accomplishing.
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