In 2025, Australia’s superannuation landscape is set to change in a big way.
The government’s proposed Division 296 tax introduces a new 15% levy on earnings associated with superannuation balances over $3 million. While it might sound like something that only concerns the ultra-wealthy, the reality is: this could affect many more Australians than you think—and sooner than you expect.
So, what exactly is this tax, who does it apply to, and how should you respond?
Let’s unpack the essentials.
What Is the $3 Million Super Tax?
Starting 1 July 2025, individuals with total superannuation balances above $3 million will face an additional 15% tax on earnings related to the portion that exceeds this threshold.
This means:
- Current tax rate on super earnings: 15%
- New tax rate on earnings over $3 million: an extra 15%, bringing it to 30% total
One Key Twist:
This tax will apply not just to realised gains (profits from assets sold), but also to unrealised gains—meaning increases in value that haven’t been cashed out.
That’s a major shift from how most taxes work in Australia and introduces potential volatility based on asset revaluations.
🤔 Who Will Be Affected?
The government estimates that roughly 80,000 Australians will be impacted at the time the law takes effect. That’s about 0.5% of all super account holders.
But here’s why you might want to pay attention, even if you’re not in that group:
- The $3 million threshold is not indexed to inflation, so more people will cross the line over time.
- With strong investment returns or high contributions, many professionals, business owners, and investors could reach that figure well before retirement.
- If you own property or hold assets in your SMSF, valuations may push your balance higher than you expect.
🧰 Why Are Some People Concerned?
There’s been significant debate about:
- The inclusion of unrealised gains, which could create tax liabilities without actual cash flow.
- Defined benefit schemes: Some public service pensions may be treated differently, raising questions about fairness.
- Planning uncertainty: Long-term retirement strategies may need to be revised.
According to reports from the Sydney Morning Herald, even those years away from retirement are reconsidering how and where they hold their wealth.
🧳 Should You Be Doing Anything Now?
If your super balance is climbing—or you’re contributing aggressively—it’s time to start thinking ahead.
Consider:
- Reviewing your SMSF investment mix and property valuation processes
- Discussing non-super investment structures (e.g. trusts, companies)
- Diversifying income sources outside super
Importantly, this isn’t about panic—it’s about planning. As reported by News.com.au, some individuals have begun restructuring their super aggressively—but without proper advice, this can lead to worse outcomes.
🔎 The Bottom Line: Why Advice Matters More Than Ever
Tax legislation is constantly evolving—and super is one of the most generous and powerful investment structures available to Australians.
So while the new $3 million tax adds complexity, it doesn’t mean super is broken. What it does mean is:
- Your wealth strategy needs to stay dynamic
- You need to consider tax, structure, access, and investment mix together
At CFV Advisory, we specialise in building future-ready strategies for Australians who are serious about protecting and growing their wealth.
Victor Idoko, CFA and founder of CFV Advisory, combines over 13 years of experience and deep technical insight to guide clients through complex policy changes with confidence.
Take Action Now!
The new tax doesn’t start until July 2025—but smart planning happens well before the rules kick in.
📞 Want clarity on how this may affect your retirement plans or SMSF? Book your personal strategy session with CFV Advisory today.
Your future self (and your future tax bill) will thank you.
Any discussion in this article does not take into account your objectives, financial situation or needs. Before acting on it, you should consider whether it’s appropriate to you, in light of your objectives, financial situation or needs.