Superannuation tax rules are changing again and there are implications for those with very large balances as well as those on lower incomes.
In a nutshell, the new plans include:
- more targeted tax rules for people with very large super balances
- extra support for low-income earners who contribute to super
- indexation (automatic increases) to make sure the tax thresholds keep up with inflation
- the removal of the proposed tax on unrealised gains
The new super tax rules will begin on 1 July 2026 and will be based on your total super balance as at 30 June 2027.
The changes follow feedback from industry groups, financial experts, and the public. Treasurer Jim Chalmers said the updates are designed to make the system fairer while still meeting the government’s goals.i
New rules for higher balances
If your total super balance (TSB) is more than $3 million, you’ll be affected by new tax rates on earnings.
Here’s how it works:
- for balances between $3 million and $10 million, earnings will be taxed at 30 per cent instead of the usual 15 per cent for the proportion of earnings between the thresholds
- for balances over $10 million, a tax of 40 per cent will apply on the proportion of earnings over the threshold
These are still concessional rates, meaning they’re lower than the top personal income tax rate, but they’re higher than the standard super tax rate.
The thresholds will be indexed over time. The $3 million threshold will increase in steps of $150,000 while the $10 million threshold will increase by $500,000 each time.
This means fewer people will be affected in the future as the thresholds rise with inflation.
Only a small number of Australians will be affected by the new rules. Less than 0.5 per cent of super account holders are expected to have balances exceeding $3 million in the 2026-27 financial year. The $10 million rule is expected to apply to fewer than 8,000 accounts, less than 0.1 per cent of all super accounts.ii
If you’re affected, you can choose to pay the tax from your super account or from funds outside of super.
No tax on unrealised gains
One of the most controversial parts of the original proposal was a tax on unrealised gains, meaning increases in the value of assets that haven’t been sold yet (such as property or shares).
This idea has now been dropped.
Instead, the new tax will only apply to realised gains (actual earnings such as interest, dividends or profits from selling assets).
Extra top-up for low income earners
The government is increasing support for low-income earners through the Low Income Superannuation Tax Offset (LISTO).iii
LISTO is a 15 per cent tax offset paid by the government into the super accounts of people earning up to $37,000 a year and is worth up to a maximum of $500.
From 1 July 2027, the current LISTO income threshold will increase to $45,000 to match the top of the second income tax bracket. Around 3.1 million Australians will then be eligible for LISTO.
The maximum government top-up payment will also be increased from $500 to $810 to account for the recent increase in the Superannuation Guarantee (SG) rate to 12 per cent.
Special rules for defined benefits funds
Some judges and politicians are members of defined benefit super funds, which work differently from regular super accounts.iv
Because it’s harder to calculate earnings in these funds, the government will develop equivalent arrangements to apply the new tax fairly.
We’re here to help you understand how the changes may affect your super and your long-term financial goals, so please give us a call.
i Reforms to support low-income workers and build a stronger super system | Treasury Ministers
