Big changes are on the horizon for Australians with large super balances. The federal government has unveiled draft legislation for a new tax targeting high-value superannuation accounts, and while it only affects a small portion of people, it’s already stirring up plenty of debate.
A New Era for Superannuation
From July 1, 2026, Australians with super balances over $3 million will face a higher tax rate on their earnings — jumping from 15% to 30%. For those with balances above $10 million, the rate will climb even higher, to 40%. The changes are expected to impact around 90,000 people, according to Treasury estimates. While that’s less than 1% of all superannuation account holders, the government says the reform is about fairness and sustainability.
Treasurer Jim Chalmers said the goal is to ensure that super tax concessions remain targeted toward helping everyday Australians, rather than disproportionately benefiting the wealthiest few. “The amendments maintain the concessional treatment of superannuation and makes superannuation tax concessions more targeted for those with large balances,” he explained when releasing the draft, reports Yahoo Finance.
Why It’s Stirring Debate
The proposal, first announced earlier this year, has been controversial from the start. The initial version of the policy would have taxed unrealised gains — essentially taxing increases in the value of assets that hadn’t yet been sold. After widespread backlash from accountants, financial advisers, and retirees, the government revised the draft to ensure the tax only applies to realised gains, or money actually earned.
Even with this adjustment, some in the financial sector remain concerned. Melbourne adviser James Wrigley said the short consultation period — closing January 16, 2026 — will make it difficult for experts to provide proper feedback. “If you don’t make that election, the prior growth will be caught up in all this as well,” he said.
Help for Low-Income Earners
Not all the changes are aimed at the top end of town. From July 1, 2027, the Low Income Superannuation Tax Offset (LISTO) will also increase, helping boost savings for lower earners. The income threshold will rise from $37,000 to $45,000, while the maximum payment will increase from $500 to $810. This move aligns the offset with the top of the second income tax bracket, offering a small but meaningful improvement for those trying to grow their retirement nest egg.
The Bigger Picture
The government insists these changes strike a balance — making the system fairer without undermining the integrity of superannuation as a long-term savings vehicle. But critics say it could discourage investment and complicate financial planning for those affected. With less than two years before the new tax kicks in, financial advisers are urging Australians with high super balances to review their strategies. Whether you see the reform as overdue or overreach, one thing’s certain — superannuation is once again in the political spotlight, and the conversation is far from over.
