Superannuation Overhaul: The $3M Cap and How It Will Impact High-Balance Accounts

The Australian Government has announced a significant change to the superannuation system, set to take effect on 1 July 2025. If your superannuation balance exceeds $3 million, this new rule is something you need to pay attention to.

Under the updated regulations, earnings on superannuation balances over $3 million will be taxed at 30%, effectively doubling the current concessional tax rate of 15%. For those with high super balances, this is a major shift, and it’s already causing a lot of debate among investors, advisers, and business owners alike.

Let's break down these changes and explore how you can plan ahead to mitigate any negative impacts.

💼 What’s Changing with Superannuation Taxation?

Currently, the tax rate on earnings from superannuation funds is set at 15%, regardless of the size of the balance. However, starting in FY2025–26, the government will introduce the following changes:

• Earnings on balances under $3 million will remain taxed at 15%.

  
  

• Earnings on balances over $3 million will be taxed at 30%.

Importantly, this higher tax rate only applies to the earnings on the portion of the superannuation balance exceeding $3 million. So, for example, if your super balance is $4 million, only the earnings from the $1 million that exceeds the threshold will be subject to the 30% tax.

📊 Why This Matters for High-Net-Worth Individuals and Business Owners

The reform targets high-net-worth individuals who have built up substantial superannuation balances as part of their long-term wealth accumulation strategy. This shift signals the government’s intention to adjust the tax concessions available to wealthier Australians.

If you're a business owner with a self-managed super fund (SMSF), or someone nearing retirement with a large super balance, this change could significantly affect your long-term financial and tax planning strategies.

Key considerations include:

• Increased tax obligations on future earnings and growth

  
  

• A potential reassessment of the attractiveness of superannuation compared to other investment options

  
  

• The need for active management of contributions, earnings, and withdrawals to ensure optimal tax outcomes

🔍 Planning Ahead: What Steps Should You Take Now?

Although these changes won’t take effect until July 2025, early planning is crucial to minimise any potential tax burdens and safeguard your financial future. Here are some strategies to consider:

✅ Review Your Super Balance

Understanding where you currently stand and where your super balance is heading can help you plan ahead. If your balance is approaching the $3M mark, consider strategies to reduce future tax liabilities.

✅ Diversify Your Investments

It might be worthwhile to explore investing outside of your superannuation fund, such as in a family trust, company, or personal portfolio. Each of these options has its own tax benefits and should be considered as part of a holistic investment strategy.

✅ Reassess Contribution Strategies

Work with your accountant or financial adviser to make sure you’re not unintentionally over-contributing and pushing your balance into the higher-tax bracket.

✅ Revisit Your SMSF Structure

If you have a self-managed super fund, now is the time to assess whether your investment strategies are still aligned with the upcoming changes to the tax regime.

🤝 How Streamlined Accountants Can Assist You

At Streamlined Accountants, we specialise in helping individuals and businesses navigate complex superannuation and taxation reforms. Our expert team can assist you in:

• Understanding the potential 30% tax on your super earnings

  
  

• Exploring tax-effective investment vehicles outside of superannuation

  
  

• Restructuring your financial plans to minimise risk and maximise growth

  
  

• Ensuring compliance with new superannuation regulations

📞 Take Action Today Before the New Rules Take Effect

With the changes coming into effect from 1 July 2025, now is the time to act. A proactive approach will help you reduce your risk, protect your wealth, and continue to grow your assets confidently.

Call Streamlined Accountants today on 0451-040-656 or email us at info@streamlinedaccountants.com.au to arrange a strategy session. Let’s work together to ensure your financial future is secure and your superannuation is structured optimally for the changes ahead.