On Friday morning, Treasurer Jim Chalmers unveiled the detail of the updated Better Targeted Superannuation Concessions legislation, which will see the proposed tax only apply to realised gains and the $3 million threshold indexed.
The Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2025 and the Superannuation (Better Targeted Superannuation Concessions) Imposition Bill 2025 will reduce the tax concessions for people with total super balances over $3 million and impose new taxes under a new Division 296 of the Income Tax Assessment Act 1997.
Treasury has published the exposure draft to the bill, and the exposure draft to the Imposition Bill, alongside accompanying explanatory materials and additional guidance.
The bill proposes:
- adding a second threshold with a headline rate of 40 per cent – this rate will apply to earnings on the part of an individual’s total super balance above $10 million;
- indexing the thresholds consistent with the approach for the transfer balance cap;
- moving to a realised earnings approach that aligns with existing income tax concepts;
- changes to exclude capital gains accrued before the start of the policy;
- applying commensurate treatment to defined benefits; and
- delaying the start date to 1 July 2026.
Announcing the release, Chalmers said the new legislation would “make superannuation tax concessions fairer and more sustainable”.
“The measure we’re consulting on from today reduces the tax concessions available to individuals whose total superannuation balance exceeds $3 million,” Chalmers said.
“The amendments maintain the concessional treatment of superannuation and makes superannuation tax concessions more targeted for those with large balances.
“The draft legislation introduces a second threshold of $10 million to make superannuation tax concessions even more targeted, and indexes the large balance thresholds of $3 million and $10 million. These changes will apply to realised earnings from 1 July 2026.”
According to the Treasurer, the changes are “consistent with the objective of superannuation”, which the government had enshrined in legislation during its last term, to “preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
“The Albanese Government is also boosting the superannuation savings of more than a million low‑income workers through changes to the Low‑Income Superannuation Tax Offset (LISTO) that ensure they receive a fairer tax concession on their superannuation contributions,” he added.
“The release of the draft legislation follows Treasury’s targeted consultations with the sector and reflects the government’s intention of introducing the legislation as soon as possible in 2026.
“The government welcomes feedback from stakeholders on the draft legislation and explanatory materials.”
Interesting update! It’s helpful to see the draft of the revised super tax legislation out for consultation especially with the focus on realised earnings and indexed thresholds above $3 million and $10 million.