The Federal Government has proposed reducing the concession paid on earnings in superannuation accounts holding more than $3 million. The worked examples below show how the tax is calculated for a range of different superannuation account holders. In the 2025–26 income year, Joan received benefit payments totaling $250,000 from her two pension accounts and made a $300,000 downsizer contribution.
On 30 June 2025, her Total Superannuation Balance (TSB) was $3.7 million, increasing to $4.1 million on 30 June 2026. Joan’s adjusted TSB at the end of the year is calculated to be $4.05 million. Her superannuation earnings for the year are $350,000.
The percentage of taxable earnings over $3 million is 26.83%. The Division 296 tax amount is calculated to be $14,085.75, which is approximately 4% of her overall superannuation earnings. On 30 June 2025, Jill’s TSB was $3 million, increasing to $3.1 million on 30 June 2026.
Her superannuation earnings for the year are $100,000. The percentage of taxable earnings over $3 million is 3.23%. The Division 296 tax amount comes to $485.
In the 2025–26 income year, John had total employer contributions of $25,000 after the 15% contribution tax. His TSB was $3.2 million on 30 June 2025, increasing to $3.4 million on 30 June 2026. John’s adjusted TSB at the end of the year is $3.375 million, with superannuation earnings of $175,000.
Government targets high super balances
The percentage of taxable earnings over $3 million is 11.76%. The Division 296 tax amount is $3,087, which is less than 2% of his overall superannuation earnings.
On 30 June 2025, Harry’s TSB was $5 million, increasing to $5.5 million on 30 June 2026. He made no contributions or withdrawals. His superannuation earnings are $500,000.
The percentage of taxable earnings over $3 million is 45.45%. The Division 296 tax amount is $34,088. Fred has retired from farming.
His children continue the farming business, paying rent to the Self-Managed Super Fund (SMSF) which holds the property as an investment asset. His total superannuation balance as of 30 June 2025 is $3.8 million. The fund receives rent in 2025–26 at a yield of 4% on the opening value of the land, which equates to $120,000.
The examples are for illustrative purposes only and based on current information about the proposed tax as of 5 June 2025. The examples show how the new super tax will impact various superannuation account holders, each with different balances and earnings. This recent proposal is intended to ensure that tax concessions on superannuation earnings above $3 million are reduced, contributing more significantly to the government revenue.
For further information or personalized advice, account holders should consult with financial advisors.
