Superannuation Change – Balances over $3 million

The Australian government has recently implemented a change to tax on super balances over $3 million. This change has important implications for those who have super balances over this threshold, and it’s important to understand how the new system works.

Under the new system, earnings on super balances over $3 million will not be calculated in the normal way. Instead, ‘earnings’ will be determined by the movement in total super balance at the start and end of the financial year, adjusting for withdrawals and contributions. This means that the amount that will be taxed at 30% will include unrealised gains.

This change is significant because it means that those with super balances over $3 million will now be taxed on unrealised gains. This is a departure from the previous system, where only realised capital gains were taxed. As a result, those with large super balances may see an increase in their tax liability.

It’s also important to note that a negative movement in asset values will not produce a tax refund, but will be carried forward and offset against future years’ tax. Additionally, under this way of calculating ‘earnings’, there will be no capital gains tax discount on realised capital gains.

While this change is not likely to affect the vast majority of Australians, those with large super balances should be aware of the implications. It’s important to review the government fact sheet and seek professional advice if necessary.

It’s also worth noting that this change is part of a broader trend towards increased scrutiny of the superannuation system in Australia. The government has introduced a number of measures in recent years to ensure that the superannuation system is sustainable and fair.

As always, it’s important to stay informed about changes to tax laws and regulations. By staying up-to-date with the latest developments, you can ensure that you are making informed decisions about your financial future.

In conclusion, the change to tax on super balances over $3 million is an important development that those with large super balances should be aware of. We encourage you to review the government fact sheet and seek professional advice if necessary. By staying informed, you can make informed decisions about your financial future.