Latest Superannuation Changes in Australia
If you’ve been following the superannuation headlines, you may have heard whispers about the government’s proposed tax changes for high-balance super accounts. Those whispers have now become louder and clearer, although some questions remain unanswered.
Treasurer Jim Chalmers has announced a significant revision to the controversial $3 million super tax proposal. Whether you’re living in Singapore, Dubai, London or Australia, these changes could affect your long-term retirement strategy.
It’s important to note that this is still a proposal and has not yet been legislated.
What’s Changing
The government has introduced a more refined version of the original plan. Here are the key updates:
- Super balances over $3 million will face a 30% tax on earnings.
- Balances over $10 million will be taxed at 40%.
- Both thresholds will now be indexed to inflation, helping to avoid bracket creep over time.
- The plan to tax unrealised capital gains has been scrapped. Only realised earnings, including both income and capital gains, will be taxed.
- The start date has been pushed back to 1 July 2026, giving funds and members more time to prepare.
- The Low-Income Super Tax Offset (LISTO) will increase from $500 to $810, and eligibility will expand to those earning up to $45,000 from 2027.
Why the Changes?
The original proposal faced strong criticism for being unfair and overly complex. Taxing unrealised gains could have left members with tax bills on assets they hadn’t sold. And without indexation, more Australians, especially younger generations, would have been caught in the net over time.
This revised plan is a more balanced approach. It still targets high-balance accounts to make super concessions more sustainable, but it does so in a way that is fairer and easier to administer.
Who’s Impacted
- If your super balance is under $3 million, you’re not affected by the new tax.
- If your balance is between $3 million and $10 million, you’ll face a 30% tax on future realised earnings above the threshold.
- If your balance is over $10 million, the tax jumps to 40% on earnings above that level.
- If you’re a low-income earner, you may benefit from the LISTO boost.
What Does This Mean for You?
Whether you’re planning to retire in Australia soon or decades from now, superannuation is a key part of your wealth strategy, even if you’re not contributing regularly while overseas.
These changes could influence:
- Where you invest within your super
- Other vehicles you consider, such as insurance bonds, investment companies and trusts
- When and how you realise gains
- The liquidity of assets within your superannuation funds
With thresholds now indexed, it’s more important than ever to review your long-term projections, especially if you’re on track to exceed $3 million before retirement.
Let’s Talk Strategy
If you’re unsure how these changes might affect your super or broader financial plan, now is the time to chat. Book a call with your Ally Wealth Adviser to discuss how these reforms could impact your strategy.
Superannuation is evolving, and staying informed is key to making smart, confident decisions.
Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.
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General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances, and objectives. We recommend you obtain professional financial advice specific to your circumstances.
