What the New Superannuation Changes Mean for You
Treasurer Jim Chalmers has announced significant revisions to Labor’s proposed superannuation reforms — backing away from taxing unrealised gains and introducing indexation for high-balance thresholds. The changes, unveiled this week, aim to make the super system fairer and more sustainable while addressing widespread concerns from investors, economists, and everyday Australians.
No More Tax on Unrealised Gains
The most controversial element of the original proposal — taxing unrealised gains — has been dropped. This means super fund members will only pay tax on realised earnings, such as interest, dividends, and capital gains from assets that have actually been sold.
The backdown removes a major concern for those with property or unlisted assets inside super, as taxing paper gains could have forced people to sell assets simply to meet their tax obligations. Economists and business leaders had warned this approach risked creating liquidity problems and discouraging long-term investment.
By shelving the idea, the government has taken a more practical and equitable path.
A Tiered Tax System for High Balances
Under the new plan, higher super balances will face a stepped tax rate structure:
- Balances up to $3 million will continue to be taxed at 15%.
- Balances between $3 million and $10 million will be taxed at 30%.
- Balances above $10 million will be taxed at 40%.
For most Australians, this change will make no difference — less than 1% of super accounts hold more than $3 million. However, for those with exceptionally large balances, the reforms will limit how much can grow at heavily discounted tax rates, ensuring super remains focused on supporting retirement rather than wealth accumulation.
Indexation to Keep Thresholds Fair
The government has also introduced indexation for the new $3 million and $10 million thresholds. This means they’ll move in line with inflation over time, preventing bracket creep that would otherwise pull more Australians into higher tax rates as the cost of living rises.
This adjustment brings the policy closer to community expectations and long-term fairness.
A Boost for Low-Income Workers
Low-income earners are set to benefit from a more generous Low-Income Super Tax Offset (LISTO). From 2027:
- The maximum LISTO payment will increase from $500 to $810, and
- The income threshold will rise from $37,000 to $45,000.
This change will directly benefit around a million Australians, many of whom are women or part-time workers, by helping to keep more of their super contributions in their accounts. It’s a meaningful step towards improving retirement outcomes for those who need it most.
What It Means for You
For most Australians, these changes will have no direct impact — their super tax rates and entitlements remain the same. Low-income workers will see a modest gain from the increased LISTO, while only those with multi-million-dollar super balances will face higher tax rates.
| Group | What changes | Likely impact |
|---|---|---|
| Average worker (under $3m) | No change to tax; LISTO increase if low income | Positive or neutral |
| High-income earner ($3–10m) | Tax on earnings rises to 30% | Moderate impact |
| Ultra-wealthy ($10m+) | Tax on earnings rises to 40% | Significant impact |
| SMSF/property holders | No tax on unrealised gains | Positive (avoids cashflow issues) |
A More Balanced Super System
The revised approach reflects an effort to keep Australia’s super system sustainable, equitable, and focused on retirement security. By protecting low-income earners and introducing reasonable limits on tax concessions for the ultra-wealthy, the government aims to restore balance to a system that has increasingly favoured high earners since 2007.
