From Wednesday, the earnings on any slice of a superannuation balance above $3 million will be taxed at about 30 per cent, double the standard 15 per cent that applies to super earnings, under a law that takes effect with the new financial year.
The measure, called Division 296, passed parliament in March. It adds 15 percentage points of tax to earnings attributed to the portion of a person's total super balance over $3 million, and 25 points to the portion above $10 million, lifting the effective rates on those bands to roughly 30 and 40 per cent. Both thresholds will move with inflation, a change from the original proposal, which fixed the $3 million line in place.
The version that became law also taxes only realised earnings. An earlier design that would have taxed paper gains on assets that had not been sold was dropped after objections from the super industry and self-managed fund holders. The first assessments are due from the year that starts on July 1, 2027.
That makes today, June 30, a date worth marking for the small number of people the tax reaches. Self-managed funds can make a one-off election to reset the cost base of eligible assets to their market value as at the end of today, so only gains from this point forward count under the new regime. The election is made at the fund level and applies to every asset, not a chosen few.
The contribution caps rise on the same day. The concessional cap, covering pre-tax contributions, goes from $30,000 to $32,500. The non-concessional cap goes from $120,000 to $130,000, and the three-year bring-forward arrangement rises to $390,000. The cap on the amount that can be moved into a tax-free retirement pension lifts from $2 million to $2.1 million.
For people who will never approach those limits, the change that matters takes effect on the same date and runs the other way. From July 1, employers must pay the superannuation guarantee on every payday rather than once a quarter, under the Payday Super rules. Quarterly payment let unpaid and underpaid super build up for months before a worker noticed; tying it to each wage cycle closes much of that gap. The guarantee rate stays at 12 per cent.
Parents gain a separate entitlement. The Tax Office will start paying a 12 per cent super contribution on government Parental Leave Pay for children born or adopted from July 1, 2025, paid after the end of the financial year and taxed at 15 per cent in the fund. The measure is aimed at the super shortfall that follows time out of the workforce to raise children.
Wage earners also keep more of each pay. The 16 per cent rate that applies to taxable income between $18,201 and $45,000 drops to 15 per cent from July 1, worth about $268 a year to anyone earning above $45,000, and falls again to 14 per cent in 2027.
For most workers, the visible change from Wednesday is a slightly larger take-home pay and super that arrives with each wage. For those with the largest balances, today is the deadline to lock in a valuation before the higher rate begins.
