Update on superannuation tax changes for large balances

By Tara Cuddihy

This article builds on my recent story about the proposed tax on superannuation balances over $3 million under the Better Targeted Superannuation Concessions (BTSC) policy (see Hort Journal, July 2025). The proposal sparked considerable concern among Australians, particularly those with Self-Managed Super Funds (SMSFs) invested in non-residential properties, including farming land. In response to industry feedback and concerns, the federal government has revised the plan’s design and timeline to ensure a fairer and more practical implementation.

Under the updated plan, several key changes have been introduced: 

• New $10 million threshold and tiered tax rates on earnings: In addition to the $3 million threshold, a second threshold at $10 million will be established to more precisely target tax concessions on very large super balances. This means earnings attributable to ultra‑high super balances at year-end above $10 million will be taxed at a total concessional rate of 40% while those attributable to balances between $3 million and $10 million will be taxed at a total concessional rate of 30%.
• Indexed thresholds: Both the $3 million and $10 million balance thresholds will be indexed over time. Indexation will adjust these thresholds in line with inflation to maintain their real value and fairness as economic conditions change.
• Realised earnings approach: The tax on high super balances will apply only to realised earnings, such as interest, dividends, rents or realised (as opposed to accrued) capital gains. This aligns the policy with standard income tax principles and limits the potential for cash flow problems that could have emerged when the tax had to be funded out of assets that were yet to realise their value.
• Delayed start date: The commencement of these changes has been pushed back to 1 July 2026 (a year later than previously planned). This delay provides additional time for super funds and members to prepare, and for the government to refine details through further consultation.

The federal government intends to introduce legislation to implement these revisions in 2026. In the meantime, Treasury will consult with the superannuation industry and other stakeholders to finalise the detailed calculations and administrative arrangements, ensuring a smooth transition when the new rules commence.

We recommend beginning to assess how this proposal might affect your SMSF, farming operations and succession plans. However, given the legislation is not yet finalised, it is prudent to avoid definitive actions until the law’s detailed mechanics are confirmed, and always seek tailored advice from your accountant, tax adviser or financial planner.

These refinements to the superannuation tax concessions reflect the government’s responsiveness to feedback and its aim to balance fairness with practicality. The welcome move to index thresholds and to apply taxation on a realised earnings approach go some way to support continued long-term sustainability for superannuation investment. Horticulture industry professionals and businesses, like all Australians, should stay informed about these upcoming superannuation changes, especially if they manage substantial super funds. With the updated measures and timeline now in place, there is still time to plan before the proposed rules take effect in July 2026.

Tara Cuddihy

Partner – Private Tax

PwC Australia

M: 0439747468

E: tara.cuddihy@au.pwc.com

This content is for general information purposes only and, therefore does not constitute financial product advice and should not be relied upon as financial product advice. For financial product advice that takes account of your particular objectives, financial situation or needs, you should consider consultation with professional advisors. This content is based on proposed legislation and may change when the law is enacted.