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The ‘Super’ Conflicts

The ‘Super’ Conflicts

After FY2025-26, profits on superannuation accounts over $3 million will be subject to a 30% tax.

The current 15% concessional tax rate applied to future profits for superannuation accounts above $3 million will increase to 30% as of 2025-26, as promised by the government. 

Superannuation accumulation phase earnings are still subject to a 15% concessional tax rate on amounts up to $3 million. The rate rises to 30% for amounts over $3 million. The change is prospective only and will not affect previously earned money.

The measure is predicted to affect 80,000 people. 

The maximum amount a member can have in the tax-free retirement period and the transfer balance cap are both unaffected by the announcement.


Prior to the 2023-24 Federal Budget, Treasury launched a consultation paper that has generated a national debate regarding the nature, purpose, and accessibility of superannuation.

The reason for superannuation is explained. The February Treasury consultation titled “Legislating the objective of Superannuation” may seem harmless at first. The goal of the consultation is to ensure that future superannuation policies are grounded in law.

The point of superannuation is to help people save money for the future so that they can enjoy a comfortable retirement with or without government assistance.

What was once obvious has, however, opened a can of worms about what superannuation is not. By definition, superannuation is not a way to amass wealth in a concessionally taxed setting if its purpose is to “preserve savings,” that is, to restrict access to superannuation savings to retirement only. 

It’s not a method for passing riches down through the generations. Because of the definition, programmes like the COVID-19 early access plan, which was widely used during the pandemic to provide individuals in financial difficulties with immediate cash (nearly 3 million people took $37.8 billion from their superannuation savings), would be rendered ineffective. It’s also not a shortcut to buying a house faster.

The Treasurer makes the additional observation that, taking into consideration all persons having a super balance, including new entrants to the workforce, the average super balance in Australia is $150,000. For individuals over the age of 65, the median balance is little under $400,000. 


Super and National building

The consultation’s second part focuses on constructing the country as a whole. The Treasurer recently made the following statement: “To my mind, defining super’s task as delivering income for retirement isn’t to narrow super’s role in our economy…it’s to elevate and broaden it.” The advice given is as follows:

“There is a significant opportunity for Australia to leverage greater superannuation investment in areas where there is alignment between the best financial interests of members and national economic priorities, particularly given the longterm investment horizon of superannuation funds.”

The initial SG (superannuation guarantee) rate of 3% was implemented in 1992, and as of 1 July 2025, it will increase to 12%. From about $148 billion in 1992, Australia’s superannuation pool has increased to more than $3.3 trillion today. As of this June 30th, it is at 139.6% of GDP; by 30 June 2061, it is expected to have grown to 244% of GDP. 

Australia’s pension fund is presently the fourth largest in the Organisation for Economic Co-operation and Development (OECD).

The consultation did not provide details on how the goal of “leveraging greater superannuation investment” may be attained. 

The current early access hardship rules for super have been deemed unchangeable by the Treasurer.

On May 9, 2023, the federal government will unveil its budget. Keep an eye out for our update, as it will contain important information for you and your super fund.


1 July 2023 Super Fund Account Balance Up, But Payments Stay the Same

On 1 July 2023, the general transfer balance cap (TBC) will increase by $200,000, bringing the maximum amount that can be held in a tax-free retirement account to $1.9 million. Each December, the TBC is adjusted based on the CPI.

The TBC only applies to the person. If your TBC was greater than $1.7 million at any time prior to July 1, 2023, that amount will carry over into the new fiscal year. If the maximum balance of your transfer balance account was between $1 and $1.7 million, your ceiling will be set at a percentage of that amount.

For example, if your transfer balance account has never been higher than a certain maximum, the ATO will use that figure to calculate the indexation of the unused portion of the cap.

Your unused ceiling would be $425,000 ($1.7m – $1.275m) if you started your retirement income stream on October 1, 2022, and your account peaked at $1,275,000 on June 30, 2022. Your unused cap percentage ($425,000 divided by $1,750,000) is 25%. Your new TBC is $1,750,000 after the indexation increase of $200,000 (25% of $200,000 equals $50,000).

You can check your own transfer balance cap, available cap space, and transfer balance account transactions using the ATO link in myGov, so there’s no need to perform the maths.

However, the limits on Superannuation contributions won’t change. Which means $27,500 for tax-deductible contributions and $110,000 for non-deductible ones. The ceilings are tied to AWOTE (average weekly ordinary time earnings) data from the previous December.