Proposed Super Reform

As accountants and financial advisors, we understand that any changes to the superannuation system can cause confusion and concern for our clients. As such, we wanted to address the recent announcement by the Australian Labor Government regarding the proposed super reform to target Australians with superannuation funds larger than $3 million.

So, let’s break down what this proposed reform means for you.

Under the current system, all earnings from super funds are taxed at a flat rate of 15% (except when the balance is in pension phase). Under the proposed reform, super funds with a balance exceeding $3 million at the end of a financial year will be subject to an additional tax of 15 cents in the dollar on some of the super fund’s earnings.

Note: The $3 million balance is per person, not per super fund. This limit encompasses all of a member’s super, including both their pension and accumulation accounts combined, rather than being limited to their accumulation accounts only.

While this policy will impact only a relatively small group of Australians, it has already generated significant debate and controversy.

The Australian Labor Government has stated that this policy aims to promote fairness in the tax system and ensure that the wealthiest Australians pay their fair share. They argue that superannuation is intended to provide a retirement income and should not be used as a vehicle for accumulating excessive wealth.

Opponents of the policy argue that it will discourage saving and investment and may lead to unintended consequences. They say that the policy will impact not only the wealthiest Australians but also those striving to build their superannuation balances through hard work and prudent investment.

While the initial focus around the new superannuation tax was on the $3 million limit, subsequent analysis has shifted to the method of calculation. Specifically, there has been concern regarding the proposal to tax unrealised gains and provide no subsequent relief, should a superannuation fund accrue unrealised losses in the future. It has also been widely criticised due to the fact that the $3 million limit won’t be indexed. Whilst $3 million is a significant balance now and only approx. 80,000 Australians will be affected by the changes, with inflation on the rise, this restrictive limit will affect significantly more individuals in the future. 

The Financial Services Council modelling provided the following real-life examples:

  • A 25-year-old IT professional earning $100,000 with a current superannuation balance of $35,000 would reach the $3 million threshold by the time they retire at age 65.
  • A 45-year-old school principal earning $150,000 today with a current superannuation balance of $650,000 would reach the $3 million threshold by the time they retire at age 65.
  • A 55-year-old dentist earning $220,000 today with a current superannuation balance of $1,400,000 would reach the $3 million threshold by the time they retire at age 65.


We understand this may be frustrating for our clients who have worked hard to accumulate wealth in their superannuation funds. Our team is here to help you navigate this change and provide tailored advice to ensure you are well-positioned to achieve your financial goals. It is important to note that the proposed reform is not yet law and is subject to consultation and review. Additionally, the tax payable on earnings generated by your super fund will depend on a range of factors, including your individual circumstances, investment strategy, and other income sources.

For those with superannuation funds under $3 million, the existing tax concession on earnings will remain in place. We encourage you to continue prioritising your superannuation contributions and seek advice on optimising your superannuation strategy.

The team at Kennedy Cross are committed to providing our clients with timely and accurate advice on all matters relating to their financial well-being. We will continue to monitor and keep you informed on any further developments on this proposed reform and how it may impact your financial situation. As always, we welcome your questions and are here to help you navigate these changes.

Follow this link to read the Treasurer’s press release and fact sheet.