There has been considerable discussion in the media following an announcement by Treasurer Jim Chalmers about upcoming changes to the proposed Treasury Laws Amendment (Better Targeted Superannuation Concessions) Bill 2023. Notably, Treasurer Chalmers revealed on 13 October 2025 that the Government will introduce amendments to the bill, addressing some of the more contentious elements.

The most significant changes include the removal of the tax on unrealised capital gains and the decision to index the $3 million superannuation balance threshold. These amendments have come about as a result of consultation with the industry and ongoing consideration by the Government.

As these adjustments are considered, it is important to be aware that they affect your superannuation arrangements.

For those with a superannuation balance in excess of $3m

The primary impact of the Bill is a reduction in tax concessions for individuals with a superannuation balance exceeding $3 million. This includes those with Self-Managed Superannuation Funds (SMSFs).
The tax rate on earnings from amounts above this threshold will increase to 30%, compared to the current 15% rate.
For those with a superannuation balance in excess of $10m
For individuals with a superannuation balance of more than $10 million, the tax rate on earnings from amounts above this threshold will increase to 40%.

Examples

Megan – both APRA-regulate fund and SMSF interests

  • Megan is 58 and she is both a member of an APRA-regulated fund and a member of an SMSF and has a total super balance of $4.5 million, of which $2.3 million is in an APRA fund and the remaining $2.2 million is in an SMSF.
  • In the 2026-27 financial year, Megan had $100,000 in realised earnings from her APRA fund and $200,000 in realised earnings from her SMSF (a total of $300,000).
  • The proportion of her $4.5 million balance above the $3 million threshold is 33.33 per cent. The proportion above $10 million is nil.
  • Megan’s BTSC [1] tax liability is therefore $15,000 (0.15 x 0.3333 x $300,000).

Emma – SMSF member with over $10 million

  • Emma is 55 and a member of an SMSF and has a total super balance of $12.9 million at the end of the 2026-27 income year. That year she was attributed $840,000 of the fund’s realised earnings for the purposes of this tax.
  • The proportion of her balance above the $3 million threshold is 76.74 per cent and the proportion of her balance above the $10 million threshold is 22.48 per cent.
  • Emma’s BTSC tax liability is therefore $115,581 (0.15 x 0.7674 x $840,000 + 0.10 x 0.2248 x $840,000). Note the combined BTSC tax rate on earnings over $10 million is 25 per cent.

Both thresholds will be indexed. The tax only applies to realised gains.

These changes are scheduled to come into effect from 1 July 2026 and apply to the 2026-27 and subsequent financial years. If Division 296 tax is implemented with the proposed changes, superannuation is likely to still be a tax-preferred investment vehicle for those generating income through their superannuation funds.

For further information, please contact your Holman Hodge advisor.

 

[1] Better Targeted Superannuation Concessions (BTSC)