We're a Baker Tilly network member
Learn more
Superannuation Shake-Up: What the Proposed Tax Changes Mean for Your Retirement
Article

Superannuation Shake-Up: What the Proposed Tax Changes Mean for Your Retirement

Are you aware of the significant changes to superannuation tax concessions that may impact your retirement planning?

These proposed changes are intended to affect those who have already achieved a large balance, however the proposal will increasingly impact Australians with ambitions for a comfortable retirement in the future.

The proposed changes to superannuation tax concessions aim to bring the tax rate to 30%, up from 15%, on earnings. This additional tax will apply to the proportion of an individual’s Total Super Balance (TSB) that is greater than $3 million.

The TSB value will be calculated based on the total superannuation balances in both the accumulation and retirement phases. Additionally, it will include amounts held in defined benefit funds, while Constitutionally Protected Funds (e.g. West State) will not be subject to the tax.

Although the government stated the new measure would only impact a small number of individuals, it was surprising to see in the announcement the $3m limit will not be indexed. This means significantly more people will be affected over time as inflation erodes this limit in real terms.

The proposal creates concern as the additional tax will apply to both realised and unrealised gains, creating a burden that needs to be paid each year, even if the asset hasn’t been sold. The tax on unrealised gains represents a drastic change from the usual way that investments are taxed. Unlike most investments where the capital gain or loss is realised only on sale, this proposed system would apply tax based on the fluctuations of the market rather than on actual realised value.

Clients who may be particularly impacted are those who hold property portfolios in self-managed funds. Under the new proposed rules, the growth in the estimated market value of property could trigger a higher rate of tax, even if the property isn’t sold. Given the illiquidity of property, this additional tax burden could require heavier drawdowns on more liquid parts of the portfolio to fund this tax and eventually require the forced sale or transfer of the property (with the associated cost).

Although these measures are only proposals and are subject to change, if passed, they may require some family businesses to restructure ahead of the 1 July 2025 start date. It is essential to review your retirement planning and consider how these proposed changes may affect your superannuation strategy.

We encourage you to reach out to us if you have any questions or concerns regarding these proposed changes. Our team is here to support you in navigating these changes and ensuring your retirement savings remain on track.

Christian Golding, Leanne Martinez, Simon Montgomery, Robert Prince, Guy Savage and Pitcher Partners Wealth (WA) Pty Ltd are authorised representative of Sentry Advice Pty Ltd AFSL 227748. This information is for general information purposes only and is not (and cannot be construed or relied upon as) personal advice. No investment objectives, financial circumstances or needs of any individual have been taken into consideration in the preparation of the content. You should always obtain professional advice to ensure products and strategies are suitable for your circumstances

Pitcher Partners Wealth (WA)

Christian Golding

Christian Golding

Executive Director

Perth


View profile
Simon Montgomery

Simon Montgomery

Executive Director

Perth


View profile
Robert Prince

Robert Prince

Executive Director

Perth


View profile
Leanne Martinez

Leanne Martinez

Strategic Wealth Adviser

Perth


View profile

Pitcher Partners insights

Get the latest Pitcher Partners updates direct to your inbox

Thank you for you interest

How can we help you?

Business or personal advice
General information
Career information
Media enquiries
Contact expert
Become a member
Specialist query
Please provide as much detail to ensure appropriate allocation of your query
Please highlight a realistic time frame that will enable us to provide advice within a suitable and timely manner. Please note given conflicting demands with our senior personnel, we will endeavour to respond to you within the nominated time frame. If you require an urgent response, please contact us on 03 8610 5477.
CPN Enquiry
Business Radar 2024
Federal Budget 2024-25
Student careers 2024-25
Search by industry