July 1 Super Tax Changes: What Will and Won’t Affect You
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- 1 day ago
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If you've caught anyone chatting about super recently, there's a good chance it's been about a new tax coming in for some of Australia's biggest super accounts. There’s a big change happening from July 1, but like with most hot topics, there’s also a fair bit of misinformation flying around. So let’s clear things up—what’s real, what’s not, and what you actually need to know.
What’s actually changing with super on July 1?
There are a few key updates coming:
Super guarantee rate is going up: Employers will now have to contribute 12% of your salary into your super, up from the current 11.5%. This is the final step in a planned series of increases that’s been happening since 2021.
More super for paid parental leave: People receiving government-paid parental leave will now also earn super entitlements.
Some thresholds are being indexed: The general transfer balance cap and the defined benefit income cap will both go up to reflect inflation.
But the big headline? That’s the new tax rule for super balances over $3 million.
What’s the deal with the $3 million super tax?
From July 1, if you’ve got more than $3 million in your super, you’ll be hit with a new tax. Here’s how it works:
Earnings on the portion of your balance above $3 million will be taxed at an extra 15% on top of the usual 15%.
So in effect, those earnings will cop a 30% tax in total.
This only affects the wealthiest 0.5% of Aussies with super – about 80,000 people.
Still confused? Here’s a quick example:
Let’s say you’ve got $4 million in super, and it grows to $4.5 million in a year. That’s $500,000 in earnings. Since one-third of the total balance is over the $3 million mark, one-third of the earnings ($166,667) will be hit with the extra 15%. That’s an additional $24,750 in tax.
If your super balance is under $3 million? This change won’t affect you at all.
When does this all start?
July 1 is the official start date. But here’s where it gets a bit unusual – the new tax hasn’t been passed into law just yet. Parliament won’t be back in session before that date, but the government is confident it’ll go through. Labor’s got a strong majority, and the Greens are on board too (though they might want some tweaks, like linking the $3 million threshold to inflation).
Treasurer Jim Chalmers has said it’s totally normal for tax changes to be legislated after they kick in, so it’s going ahead either way.
What about talk of big changes to when and how you can access your super?
Total nonsense.
You might’ve heard whispers about the preservation age (the age when you can start accessing your super) going up from 60 to 70, or new withdrawal limits being put in place.
These are completely false. There are no changes to when you can access your super, and no new restrictions on how much you can withdraw.
In fact, this fake news has been circulating so much that the Tax Office had to step in and call it out as “classic fake news”.
The takeaway?
There are a few legit changes coming to super on July 1—especially that new tax if you’ve got over $3 million in your account. But a lot of the scary stuff being thrown around is just misinformation. If your balance is under $3 million, you’re not going to see any change in how your super is taxed.
As always, if you’re not sure about how this affects you personally, it’s a good idea to check with a financial adviser or trusted source. Don’t fall for the fear-mongering!
Stay tuned with Aus News Lanka – the leading platform for news for Australians.
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