Superannuation Tax Shake-Up: What High-Balance Holders Need to Know Before 2026
Superannuation continues to be one of Australia’s most generous long-term wealth builders. But for those with very large balances, the rules may soon change. The Federal Government has outlined significant reforms — known as the Better Targeted Superannuation Concessions (BTSC) — designed to reshape how high-balance superannuation accounts are taxed.
Key Takeaways
- The Federal Government has proposed new tax measures for individuals with super balances over $3 million.
- These measures are not yet law and remain subject to consultation and parliamentary approval.
- The proposal introduces two extra tax tiers on attributed taxable earnings, not on the entire super balance.
- The Government proposes excluding unrealised gains, but final calculation rules have not been legislated.
- Only a very small proportion of Australians (less than 0.5%) are expected to be affected.
Think of your super like a gold seam. Most Australians can keep mining without concern. But if your balance sits near or above the $3 million mark, a new tax tunnel may soon open beneath your feet.
Before you worry, it’s important to understand that these changes are proposed only. The ATO confirms they remain subject to legislation and are not in effect.
Why the Government Is Proposing New Tax Rules
The intent behind the reform is to ensure superannuation tax concessions are “better targeted” and not disproportionately benefiting individuals holding extremely large balances.
According to Treasury, less than 0.5% of Australians are expected to be affected at the $3m threshold, and just 0.1% above $10m.
Source: Treasury Fact Sheet – Better Targeted Superannuation Concessions
What’s Currently Proposed
The Government intends to apply extra tax to taxable earnings linked to an individual’s total super balance above $3 million. Importantly, this is not a tax on the balance itself.
1. Applying the tax to “taxable earnings” only
Earlier proposals included unrealised gains, but this was heavily criticised. The updated approach — as outlined in consultation papers — proposes to tax only realised taxable earnings.
However, the ATO notes the methodology for attributing earnings to individual members is not finalised.
ATO: “Reporting requirements will be outlined after legislation progresses.”
2. A Two-Tier Proposed Structure
Industry consultation material (not ATO law) currently outlines:
| Balance Portion | Proposed Extra Tax | Effective Total Tax |
|---|---|---|
| $3m–$10m | +15% on earnings | ~30% |
| Over $10m | +25% on earnings | ~40% |
This structure could change before legislation is introduced. Source: Industry commentary (Ords, SuperGuide, Financial Services Council)
3. Indexation of thresholds
Consultation documents suggest thresholds may be indexed, but this is not confirmed in legislation.
4. Start date
The Government’s stated intention is commencement from 1 July 2026, but that is dependent on the bill passing well before then.
What’s Still Unknown or Unclear
Because legislation is not yet introduced, key details remain uncertain:
How taxable earnings will be attributed
The ATO notes super funds will need to calculate taxable earnings attributed to each affected member — but the formula does not yet exist.
This is especially important for:
- SMSFs with illiquid assets
- funds with property
- funds with unlisted shares
- pension-phase accounts
- defined benefit interests
These complexities mean the actual impact may differ significantly between funds.
Examples: What It Could Look Like
Many advisers use hypothetical examples to give a sense of scale. These are not official ATO examples but are consistent with industry commentary.
Example – $4.5m Balance
If taxable earnings were $300,000 and one-third of the balance sits above $3m, the proportional earnings could attract an extra 15% tax (if legislated).
Example – $12.9m Balance
A portion of earnings would fall into Tier 1, and another into Tier 2. Tax could escalate progressively.
These examples are useful illustrations — but the actual numbers depend on the final legislation and the ATO’s attribution methodology.
What You Should Do Now
1. Review your total super balance
Get an early view of where you may sit by 2026.
2. Stress-test your SMSF or fund structure
Consider liquidity planning — especially if your fund holds property or unlisted assets.
3. Stay updated
These proposals have already changed once and may change again before reaching Parliament.
4. Seek advice tailored to your situation
Super strategies should not be reshaped on the basis of draft policy alone.
Final Thoughts
The superannuation tax shake-up is shaping up to be the biggest reform for high-balance holders in years — but so far, everything remains proposed, not final.
For most Australians, the news changes nothing.
For those sitting on large retirement “gold lodes,” the key is to prepare early, stay informed, and avoid making big decisions until legislation is clear.
If your balance is close to or above $3 million, let us help you map out the smartest path forward.
Contact DJ Grigg Financial today — protect your golden future with expert advice.