New 15% super tax to apply from 1 July 2025.

The Government recently announced it will be imposing a 15% additional tax on individuals that have more than $3 million in superannuation.  The new measure is expected to commence from 1 July 2025 (i.e. the start of the 2026 income year).

The main takeaways from the information provided thus far include the following:

• The additional 15% tax will broadly apply to the annual movement in the value of an individual’s superannuation balance, adjusted for withdrawals and contributions.  These ‘earnings’ are further adjusted to ensure only the proportion corresponding to the balance above $3 million will be subject to the new tax. There is currently no differentiation between realised and unrealised capital gains which effects the CGT discount to unrealised capital gains and also there is no refund if unrealised gains reversed.  This means if you pay tax on the unrealised gain first, but then the asset value goes the opposite way in future years, you don’t get the clawback and you have to wait for your investment value to recover before you will see the benefit of the pre-payment.

• There will be no limit imposed on the size of superannuation account balances.

• Individuals will have the choice of paying the tax liability personally or from their super fund.

In current terms, the Government expects that the new tax will apply to 0.5% of people with money in superannuation (around 80,000 people).  However, the proposal does not currently allow for indexation of the $3 million threshold, so more individuals may be impacted in the future.

The Government will consult on the implementation of this proposed measure, so expect to hear more about it before 2025.