Super tax hike: will it Impact your retirement savings?

Man holding laptop excited about three million dollar tax hike.

The buzz around the government's proposed tax hike on super accounts over $3 million has reached a crescendo, with the Treasury Secretary now sifting through a heap of submissions from people eager to have their voices heard. 

Wondering what all the fuss is about? Well, you're not alone. And while most of us won't be directly affected by this change, it's definitely a good reminder to keep an eye on the ever-changing world of super.

The Albanese government's proposed tax, known as the ‘division 296 tax liability,’ introduces a tiered tax system for super accounts exceeding $3 million. If your super account has $4 million, the first $3 million will be taxed at the standard 15%, while the additional $1 million over the threshold will be taxed at the new 30% rate.

Here’s what you need to know about the proposed legislation, no matter how much you have in super.

For those with super accounts over $3 million:

  • A potential tax increase from 15% to 30% on super earnings over $3 million may be on the horizon, starting July 2025.
  • This would only affect earnings accumulated after the law comes into effect.
  • Chatting with a financial expert could be a great way to wrap your head around these changes and make sure your future's on track.

For those with less than $3 million in super:

  • These changes highlight the fluid nature of super laws and the importance of staying informed.
  • Regular reviews of your super strategy are crucial for maximising your retirement savings.
  • Think about chatting with a financial advisor to come up with some tailored strategies that could really give your retirement savings a lift.
  • The $3 million threshold won't rise with inflation, potentially impacting more accounts over time.

The proposed tax changes are set to take effect from the 2025-26 financial year. They were first unveiled by the Treasurer in February, before being included in the federal budget in May. Keep an eye on official government communications for any updates or changes as the legislation progresses.

For all the info you need to understand your super and maximise your retirement savings, check out our superannuation guides hub.

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