Govt makes super less generous for those with large nest eggs

The federal government has announced plans to reduce tax breaks for Australians with superannuation balances above $3 million.

Currently, earnings from super in the accumulation phase are taxed at a concessional rate of 15%. This will continue for all super accounts with balances below $3 million. However, from 1 July 2025, the concessional tax rate applied to future earnings for balances above $3 million will be 30%.

Individuals will have the choice of either paying the tax out-of-pocket or from their superannuation funds.

This change will apply to future earnings – it will not be retrospective. Also, it will not impose a limit on the size of superannuation account balances in the accumulation phase.

About 80,000 people, or about 0.5% of Australians with superannuation accounts, will be impacted, according to government estimates.

Treasurer Jim Chalmers said the government needed to take action given “the challenges facing the economy and the budget”.

“The 2022‑23 Tax Expenditures and Insights Statement ... shows that the revenue foregone from superannuation tax concessions amounts to about $50 billion a year. The cost of these concessions is projected to exceed the cost of the Age Pension by 2050.”