Parliament is currently reviewing legislation proposing an additional 15% tax on earnings from super balances exceeding $3 million. While this may not be a concern for the average worker, individuals with substantial property or other non-liquid assets in their self-managed superannuation fund (SMSF), such as farmers and business owners holding business property in their SMSF, face increased risk if the legislation is enacted.

The critical issue revolves around the calculation of this tax. It encompasses the growth in a member’s superannuation balance over the financial year, accounting for contributions and withdrawals. This includes both realized gains from asset sales and unrealized gains resulting from an increase in the value of superannuation assets, such as property appreciation.

In case a member’s total super balance decreases, the loss can be offset against future years. The Australian Taxation Office (ATO) will undertake the annual tax calculation, with the initial testing of members with balances exceeding $3 million scheduled for June 30, 2026. The first notice of assessment for affected individuals is anticipated in the 2026-27 financial year.

Individuals likely to be affected by this impending tax change are advised to consult with their financial advisers. While maintaining assets within superannuation remains a favorable option for many due to tax and planning considerations, ensuring one’s optimal position is crucial in navigating these changes.