Australia’s superannuation system is facing one of its most significant tax changes in years — a move that could affect high-balance super accounts and reshape retirement planning strategies. As a financial adviser, it’s important to help clients understand the new super tax, what it means for their retirement goals, and the options available well before the next financial year starts.
What’s the “New Super Tax”?
The government has proposed a 15% additional tax on earnings linked to super balances above $3 million. If passed, this change — commonly referred to under Division 296 — is expected to begin from 1 July 2026, with the first assessments after 30 June 2027. It’s designed to reduce the tax concessions on very large retirement savings, while leaving most Australians’ concession settings unchanged.
Under this structure:
- Earnings above $3 million would face extra tax on top of the usual super fund tax.
- A second tier may apply to balances over $10 million, with even higher rates.
This makes planning more complex for high-net-worth individuals approaching or in retirement a group that often benefits from personalised guidance from a financial adviser.
Does Giving Money to Kids Avoid the Tax?
One common question many potential retirees ask is whether gifting wealth to adult children now (for example, giving money to kids before retirement) can sidestep the new tax. The short answer from legal and tax experts is no there are no specific tax advantages simply for giving money away to avoid a super tax trigger. Wealth transfers outside super have separate tax implications and don’t impact how your superannuation balance is assessed under Division 296.
This is particularly relevant for families in regional centres such as Bendigo, where retirees often balance lifestyle planning with generational wealth goals. A well-structured retirement plan — discussed with a financial adviser — is usually more effective than reactive gifting or ad hoc strategies.
What Financial Advisers Are Recommending
For clients with super balances nearing or above $3 million, advisers are working through practical planning options that align with long-term retirement goals:
Review Super Growth Projections
Understanding how an investment strategy could push a balance over thresholds is critical. Some advisers model future investment returns to estimate whether the new tax will apply in a client’s expected retirement timeline.
Strategic Asset Mix Adjustments
Reallocating investment holdings — for example, favouring lower-volatility income assets over high-growth assets — can help limit unnecessary peaks in your super balance at financial year-end.
Timing of Withdrawals
If retirement is imminent, withdrawing amounts (where tax-efficient) before July 2026 might reduce exposure to additional tax. However, this requires careful balance against other retirement income needs.
Each of these moves carries implications for retirement income stability and estate planning — something that a financial adviser can help navigate with tailored advice.
Removing excess funds and considering alternative investment vehicles
Where superannuation balances are expected to exceed relevant tax thresholds, some retirees may consider progressively withdrawing excess funds and investing them in other tax-effective structures outside superannuation. Depending on personal circumstances, this could include investment portfolios held in individual or family trust structures, or allocating capital towards assets with more favourable tax outcomes. Any such strategy needs to balance tax efficiency with retirement income needs, estate planning objectives and long-term investment risk, and should be assessed carefully with a financial adviser.
What This Means for Your Retirement
It’s important to remember:
- Most Australians won’t be affected. Only a small proportion have super balances above $3 million and even fewer above $10 million.
- The new tax targets the growth (earnings) on large balances rather than the underlying super balance itself.
- The change does not alter the current tax-free treatment of super income streams for retirees aged 60 and over, outside the extra earnings tax.
Retirement planning is more nuanced today than ever, especially for high-balance accounts. Working with a qualified financial adviser ensures you’re interpreting these tax changes correctly and structuring your super and broader financial plan to suit your goals — be it income in retirement, legacy planning, or lifestyle aspirations in places like Bendigo, Melbourne or other regional communities.
Final Thoughts
Change in super taxation is happening. If you think your retirement nest egg might be impacted, start the conversation sooner rather than later. Whether it’s staying under the threshold, managing investment strategies, or integrating super into your overall financial and estate plan, well-informed decisions today can deliver greater confidence and security in retirement.