Recent discussions around superannuation in Australia have focused on new tax reforms set to target high-balance accounts. From July 1, changes will be implemented, notably a tax imposed on superannuation accounts exceeding $3 million, in addition to other adjustments to the system.
The most significant modification involves superannuation earnings for accounts with balances over $3 million, which will now be subject to an extra 15% tax, effectively raising the overall tax rate on earnings to 30%. This change affects approximately 80,000 Australians, who represent the wealthiest 0.5% holding super accounts. Importantly, the tax only applies to earnings beyond the $3 million threshold.
In tandem with this major fiscal adjustment, the employer superannuation guarantee will rise from 11.5% to 12%, marking the final increase in a series that commenced in 2021. Other adjustments scheduled for July 1 include the increase of the general transfer balance cap and the defined benefit income cap due to indexation, as well as the introduction of superannuation entitlements for individuals receiving government-paid parental leave.
Despite the attention surrounding the $3 million rule, misinformation has proliferated regarding other alleged changes to superannuation, specifically concerning withdrawal limits and the preservation age—increasing from 60 to 70 years. However, these assertions are entirely unfounded and should be dismissed.
The new supplement tax will officially commence on July 1, consistent with the Treasurer’s assurance that the changes will proceed even if the legislation has not yet passed. While there are expected modifications to accommodate concerns in the Senate, the shift remains on track. The government has indicated that it is not unusual for tax adjustments to be legislated after their initiation date.
In summary, the primary upcoming changes to superannuation involve new tax measures for high-balance accounts and miscellaneous adjustments to contributions and entitlements. Thus, individuals with balances below $3 million will not experience any changes to their tax obligations or superannuation rules.