For many investors, it’s not simply that super remains attractive but that the rules continue to change. Understanding these changes can help ensure your strategy takes advantage of available opportunities while staying on track with your financial goals.

A changing tax environment

Outside of super, tighter rules around the use of discretionary trusts and closer scrutiny of income distributions have reduced some traditional tax planning flexibility. Combined with the ongoing treatment of capital gains, this has made tax outcomes in non-super structures less predictable for some investors.ⁱ In contrast, superannuation continues to provide favourable tax treatment. This is a key reason why super is becoming increasingly important in long-term financial planning.

Payday Super – boost your retirement savings

One of the more practical changes is the introduction of Payday Super, which requires employers to pay super contributions at the same time as wages rather than quarterly.ⁱⁱ While this is primarily an administrative shift, it can have a real impact on individuals’ super balance. More frequent contributions mean compounding begins earlier. Over time, this could lead to improved retirement outcomes.

Higher contribution caps create more opportunities

From 1 July 2026, the concessional superannuation contribution cap (including employer contributions and salary sacrifice) increased to $32,500 from $30,000 in the 2025-2026 financial year.

Non-concessional caps have also increased, from $120,000 in 2025-2026 to $130,000 in the 2026-2027 financial year, enabling larger after-tax contributions. This can be particularly relevant for individuals who have accumulated savings outside super and wish to transfer funds into a more tax-advantaged environment.ⁱⁱⁱ

Carry-forward and bring-forward rules

Two existing rules continue to offer significant opportunities when used effectively.^iv

The carry-forward rule allows those with a total super balance below $500,000 on 30 June in the previous financial year to use unused concessional cap amounts from previous years. This can be especially beneficial for those with irregular income patterns, such as business owners or individuals returning to work after a break.

The bring-forward rule allows you to make several years’ worth of non-concessional contributions in one year, subject to eligibility criteria. This can be particularly useful when receiving an inheritance, selling an asset or restructuring investments.

Parental leave contributions

Another important development is the extension of super contributions to government-funded parental leave, introduced last year. It recognises the long-term impact that time out of the workforce can have on retirement savings, particularly for women.^v While the financial impact may appear modest in the short term, over time the effect of compounding can be meaningful.

Division 296 tax

One of the more widely discussed measures is the Division 296 tax, which applies an additional tax on earnings associated with super balances above $3 million.^vi

While this affects a relatively small proportion of investors, it represents an important shift in the superannuation landscape. The measure is designed to target very large balances, with the objective of limiting the extent of tax concessions at higher levels of wealth.

Transfer Balance Cap increase to $2.1 million

The increase in the Transfer Balance Cap to $2.1 million is another positive development, particularly for those approaching or entering retirement.

This cap determines how much can be transferred into the tax-free retirement phase. An increase allows more capital to benefit from a zero per cent tax rate on earnings, enhancing after-tax income in retirement.

Bringing it all together

Superannuation continues to offer a compelling tax environment, particularly when compared with other investment strategies that are facing increased complexity and scrutiny.

Contribution caps, along with carry forward and bring forward rules, provide multiple pathways to build super balances over time. Changes such as Payday Super and parental leave contributions highlight the benefits of regular, ongoing investment into super and the power of compounding. While new measures such as Division 296 introduce additional considerations, they do not diminish the overall value of super for most investors.

With so many superannuation options, our team are ready to help you find the plan that suits you the best, contact us here.

i Capital Gains Tax and Discretionary Trusts Reform | Treasury.gov.au

ii Payday Super | Fair Work Ombudsman

iii Contributions caps | Australian Taxation Office

iv Carry forward and bring forward rules | ATO

v Paid Parental Leave Superannuation Contribution | ATO

vi Better Targeted Super Concessions is law | ATO

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The good news is that planning ahead and financial advice can provide choices and help avoid some of the stress.

Here are five things worth considering.

1. How will you pay for your room?

Room prices vary but average just over $600,000 across Australia. And with choices on how to pay, it is important to understand your options and the implications of each one.

You will have a choice to pay a lump sum, known as a Refundable Accommodation Deposit (RAD), make ongoing Daily Accommodation Payments (DAPs), or use a combination of the two.

You should seek advice to run the numbers on cashflow and overall wealth position to decide which option might work best for you.

2. Could your super help fund the move?

Your SMSF may be one of your largest financial assets, so it shouldn’t be overlooked when considering how to fund aged care.

You might consider withdrawing money from super to help pay a RAD rather than selling other investments, especially as these withdrawals are tax-free after age 60.

But before withdrawing money, it is important to understand what you may be giving up. The lump sum is mostly refundable when you leave care, but if you have taken it out of your SMSF, you won’t be able to put it back in.

3. Don’t forget about tax after death

Your super may be tax-effective while you are alive, but tax may be payable when it passes to beneficiaries such as adult children. The potential tax consequences for your estate might influence whether retaining money in super or using it to fund aged care is the better strategy.

It is also a good time to review your binding death benefit nominations and broader estate planning arrangements.

4. Who will manage your SMSF if you can’t?

One of the most important questions is also one of the easiest to put off – what happens if you can no longer manage your own financial affairs?

If illness or declining capacity means you can no longer perform your role as SMSF trustee, it is critical to have an appropriate enduring power of attorney in place so that person can take over the legal responsibilities.

Think carefully about who you appoint. They may ultimately have considerable control over one of your largest assets.

5. Rethink the structure

For some people, this planning process may raise another question: is an SMSF still the right structure for the next stage of life? This thinking will be impacted by the reasons why you set up an SMSF and the benefits it offers you – and every person needs to consider this for their own situation.

Need help with aged care decisions?

These are not decisions you should make alone. We offer licensed and specialist aged care advice, to help you make the right choices. If you’d like to talk through your situation or understand your next steps, reach out to our team today to discuss your situation here.

Our team are ready to help you plan ahead and provide financial advice to help you make the right choices for you and avoid some of the stress. Contact us here.

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But recent data suggests the sector is undergoing a quiet transformation.

Alongside tax reforms and persistent compliance challenges, younger people are slowly moving into the SMSF space. While 85 per cent of SMSF members are 45 years or older, there’s been significant growth in members aged between 25 and 34 years from just 2.4 per cent two years ago to around 10 per cent now.ⁱ

Almost 8,000 new SMSFs were established in the three months to the end of March 2025 with the number of new members increasing by 13,000. Australia’s SMSFs hold an estimated $1.02 trillion in assets with 26 per cent invested in listed shares and 16 per cent in cash and term deposits.ⁱⁱ

A new tax era

The new Division 296 super tax, due to apply from 1 July 2025, is aimed at those with total superannuation balances exceeding $3 million. An extra 15 per cent tax will apply to earnings on the portion of a member’s balance above $3 million, effectively lifting the tax rate on those earnings to 30 per cent.

What makes Division 296 particularly contentious is the inclusion of unrealised gains. For example, a share portfolio the SMSF holds has seen positive returns. Trustees may face tax liabilities on paper profits, even if assets haven’t been sold. This may cause issues for SMSFs holding illiquid assets such as property or farmland that has increased in value.

SMSF Australia and other industry bodies have raised concerns about fairness, complexity and the potential for unintended consequences.

Trustees with high balances should begin planning now before 30 June 2026, to consider asset rebalancing, contribution strategies and the timing of withdrawals. SMSF Australia recommends obtaining advice about your specific circumstances.ⁱⁱⁱ

The advice gap

Despite the increasing complexity of SMSF regulation, the vast majority of trustees continue to operate without professional advice. While the number of SMSFs using financial advisers has grown to 155,000, up from 140,000 in 2023, some 483,000 are not using a financial adviser.^iv

This could lead to costly mistakes, especially when navigating contribution caps, pension strategies or related-party transactions. SMSF Australia says that while there’s no legal requirement to obtain advice from a licensed financial planner, “unless you have the skills and expertise to do this yourself, it is certainly conventional wisdom to do so”.^v

The compliance burden

Every SMSF must undergo an annual audit by an approved SMSF auditor. This includes verifying the fund’s financial statements and ensuring it is compliant with super laws. Trustees are also required to value all fund assets at market value as at 30 June each year, using objective and supportable data.

For property and other complex assets, valuations can be time-consuming and costly. The ATO recommends using qualified independent valuers when assets represent a significant portion of the fund or are difficult to assess. Auditors may request evidence such as comparable sales, agent appraisals or formal valuation reports.^vi

Failure to maintain accurate records or provide sufficient documentation can result in audit delays, contraventions or penalties. Trustees must also ensure their investment strategy is regularly reviewed and documented, particularly when starting pensions or making significant contributions.

Looking ahead

As the SMSF sector evolves, trustees face a dual challenge: adapting to new tax rules and maintaining rigorous compliance. For those considering an SMSF – or already managing one – the message is clear. Getting financial advice can give you peace of mind when the rules are regularly changing.^vii

With Division 296 to contend with and a younger demographic stepping in, the sector is poised for both growth and greater scrutiny.

Whether you’re a seasoned trustee or just starting out, now is the time to review your fund’s structure, seek expert guidance and ensure your paperwork is in order. The future of SMSFs may be more dynamic than ever, but it will also demand greater diligence.

If you have questions about your SMSF or setting yourself up, contact our team here.

i Highlights: SMSF quarterly statistical report March 2025 | Australian Taxation Office

ii Self Managed Superannuation Funds – SMSF quarterly statistical report March 2025 – Data.gov.au

iii Understanding Div296 I How will taxation of unrealised gains work

iv New SMSF trustees propel uptake of financial advice, but $1 trillion sector still has significant advice gaps | Vanguard Australia

v What are the rules for Financial Planners giving SMSF Advice? – SMSF Australia

vi SMSF administration and reporting | Australian Taxation Office

vii About SMSFs | Australian Taxation Office

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If our working years can be regarded as the time when we aim to build up our superannuation savings, our retirement years can equally be regarded as the time when we aim to spend them. 

At least that’s the objective for most Australians. Which generally leads to the question: how do I start accessing my super funds when I do stop working, or maybe even before I stop working? 

This article focuses on the basics, including the general eligibility rules around accessing your super and how to switch your super accumulation account to an account-based pension. 

What age can I access my super? 

To legally access your super, you generally need to have met a condition of release after turning 60-years-old. 

You can do so by either stopping work completely (retiring) or by keeping working and starting a transition to retirement income stream (TRIS). 

Doing so can enable you to reduce your current working hours and use your TRIS pension payments to top up your part-time income. 

In either case, you have the options of turning on a pension income stream, making a lump sum cash withdrawal, or doing a combination of both.  

How do I start a pension account? 

Importantly, to start accessing your super, you will need to roll some or all of it over from your accumulation account into a newly created pension account. 

Those starting a TRIS continue to receive compulsory super guarantee payments from their employer (which are taxed at the normal rate of 15%) into their super accumulation account. The funds held in a pension account can be accessed, however keeping in mind that investment earnings in the pre-retirement phase are also still taxed at 15%. 

Most super funds offer pension account products and different investment options, similar to their accumulation account products. Those with a self-managed super fund should contact their SMSF accountant and/or speak to us to facilitate the super rollover and pension account conversion processes. 

You may need to contact your super fund to find out their process, which is typically as simple as lodging a request with your fund by filling out a form and providing information such as how much of you super you want to roll over, and where to. 

Once your funds are in a pension account you could then take some out as a lump sum. The Australian Tax Office (ATO) has mandated minimum annual withdrawal amounts, which depend on your age. 

There is a limit on the maximum amount that can be transferred as a tax-free retirement income stream from super to a pension account, known as the transfer balance cap. This is currently set at $2 million. The ATO keeps track of how much you transfer, and if you go over the cap it will levy an excess transfer balance tax. 

If you have more than $2 million in super you have the option of keeping the excess in your super account and paying up to 15% tax on your earnings, or you can withdraw the excess super as a lump sum. 

What are the tax considerations in pension mode? 

If you’re aged 60 or over and fully retired, any income earned on your pension assets is tax free and so are the pension payments you withdraw. 

Also, a major advantage is that the profits from any investments sold within a pension account are completely capital gains tax free. 

What are the minimum pension withdrawal amounts? 

Once you’ve rolled over some or all of your super to an account-based pension you are required by law to withdraw a minimum pension amount each financial year, which is a percentage of your account balance based on your age. 

For new pensions, the minimum withdrawal amount is calculated on a pro-rata basis from when a pension commences to the end of the financial year. 

There are restrictions on how much can be withdrawn tax free through a TRIS in a financial year if you’re under 65, until you’ve met a condition of release. The minimum withdrawal amounts is 4% of your super balance and the maximum is 10%. 

The table below shows the required minimum withdrawal rates if you’re in pension phase and are fully retired. 

Source: Australian Tax Office 

Any amounts leftover in your pension account when you die will go to your nominated beneficiaries. Depending on the type of beneficiary (reversionary, spouse, dependant or non-dependant) the amounts can be paid as an ongoing pension stream until the account runs out or as a lump sum. 

Consider getting professional advice 

If you’re wanting total financial flexibility in retirement, you could consider leaving part of your money in super, rolling over some of it into an account-based pension, and also withdrawing lump sums whenever you need to. 

There are a range of benefits from adopting a combination of your options, although there may also be potential tax consequences for both you and your beneficiaries. 

Managing the combination of a super accumulation account, an account-based pension, an Age Pension entitlement (if eligible), potential investment earnings outside of super, and irregular lump sum payments, can be highly complex. 

Using our services is a worthwhile consideration as you weigh up all of your retirement options. Contact the team here.

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™ 

GENERAL ADVICE WARNING 
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966). The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”). We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser.You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. Important Legal Notice – Offer not to persons outside Australia The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws. © 2025 Vanguard Investments Australia Ltd. All rights reserved. 

CloseEdit 

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For many Australians, superannuation is their greatest asset outside the family home. 

But do you have a plan for who will receive your super if something happens to you? 

The laws around super death benefits are complex, with strict rules about who can receive these benefits. So, it’s crucial to plan ahead. 

One approach that can help provide certainty is making a binding death benefit nomination, but even then, there are some important things to consider. 

What happens to your superannuation when you die? 

Upon your death, your super and any life insurance held in your fund must be paid out to a beneficiary, according to super law and your fund’s trust deed. 

Importantly, the rules for who receives superannuation are different from other assets, like property and shares held outside of superannuation, and superannuation does not automatically form part of your estate. Even if you have written instructions in your will about your wishes, the rules about beneficiaries in super law take precedence. 

That’s why choosing a beneficiary is such an important decision. 

Who can you nominate as your beneficiary? 

The trustee of your super fund can usually only pay a death benefit to one of your “dependants”, as defined by super law. 

This includes: 

• Your spouse - both married and de facto partners (unmarried but living together as a couple). 

• Your children - including adopted children, stepchildren, children of your spouse or other legally recognised children. 

• Your ‘interdependents’ - someone you live with in a close personal relationship, where one or both of you provide financial, domestic and personal care support to the other. 

• Your legal personal representative - the executor of your will or administrator of your estate. They are not considered a dependant but can still be nominated as a beneficiary. 

The dependency rules are complex and very important in the context of administrating death benefits, and there are also tax implications.  

That’s why it’s a good idea to seek advice from us or estates lawyer about your personal circumstances. 

What happens if you don’t nominate a beneficiary? 

If you don’t nominate a beneficiary with your super fund, the fund’s trustee will decide who receives your death benefit based on superannuation laws and the fund’s trust deed.  

This could result in your super being given to someone you might not have intended. 

In these situations, the trustee will first try to pay the benefit to your dependants and/or a legal personal representative. If you have neither, the trustee will pay the death benefit to another person they determine. 

How binding death benefit nominations can help 

To avoid unintended consequences, you can lodge a binding death benefit nomination with your super fund.  

A binding nomination is legally ‘binding’ on the super fund’s trustee. As long as your nomination is valid at the date of your death, the trustee will generally be bound to follow your instructions. 

Binding nominations usually expire after three years. But some super funds offer non-lapsing binding nominations which don’t expire (but which you can still change or revoke if you want to at any time). 

You can also make a binding death benefit nomination if you have a self-managed super fund (SMSF), providing it’s allowed in the trust deed. 

What to know about non-binding death benefit nominations 

Many funds also allow members to record non-binding nominations.  

If you have a non-binding nomination, the trustee will take your preferences into account when deciding how to distribute your benefit in accordance with superannuation law. 

However, it doesn’t guarantee that your death benefit will be paid exactly according to your wishes.  

For example, the trustee may change the proportions or may include other dependants not named in your nomination. 

Why it’s important to regularly review your super beneficiaries 

If you have a binding death benefit nomination, it’s important to regularly review it to ensure it reflects your current wishes and circumstances.  

A good rule of thumb is to check your nomination of beneficiaries whenever your personal circumstances change. 

For example, if you get married, register a relationship, get divorced, have children, change an interdependency relationship, start a new interdependency relationship, or if one of your nominated beneficiaries dies. 

Death benefit nominations are a complex topic, so it’s a good idea to seek professional advice. 

For more information, including how to make a binding death benefit nomination, give us a call. 

Source: Vanguard 

This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™ 

GENERAL ADVICE WARNING 
Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) is the product issuer and operator of Vanguard Personal Investor. Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee and product issuer of Vanguard Super (ABN 27 923 449 966). 
The Trustee has contracted with VIA to provide some services for Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc (collectively, “Vanguard”). 
We have not taken your or your clients’ objectives, financial situation or needs into account when preparing our website content so it may not be applicable to the particular situation you are considering. You should consider your objectives, financial situation or needs, and the disclosure documents for the product before making any investment decision. Before you make any financial decision regarding the product, you should seek professional advice from a suitably qualified adviser. A copy of the Target Market Determinations (TMD) for Vanguard’s financial products can be obtained on our website free of charge, which includes a description of who the financial product is appropriate for. You should refer to the TMD of the product before making any investment decisions. You can access our Investor Directed Portfolio Service (IDPS) Guide, Product Disclosure Statements (PDS), Prospectus and TMD at vanguard.com.au and Vanguard Super SaveSmart and TMD at vanguard.com.au/super or by calling 1300 655 101. Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. This website was prepared in good faith and we accept no liability for any errors or omissions. 
Important Legal Notice – Offer not to persons outside Australia 
The PDS, IDPS Guide or Prospectus does not constitute an offer or invitation in any jurisdiction other than in Australia. Applications from outside Australia will not be accepted. For the avoidance of doubt, these products are not intended to be sold to US Persons as defined under Regulation S of the US federal securities laws. 
© 2025 Vanguard Investments Australia Ltd. All rights reserved. 

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Australian superannuation laws are set to change once again in the 2025-26 financial year as the nation’s fast-growing retirement savings system continues to evolve.

Below is a summary of the changes that will come into effect from 1 July, 2025, as well as looming legislative changes. 

Increased super guarantee (SG)

Millions of working Australians will receive a welcome superannuation boost from the start of July when the mandatory superannuation guarantee (SG) rate rises by 0.5% to 12%.

The SG is the percentage of your ordinary time earnings (in addition to wages) that is paid into your super fund account by your employer.

The 2025-26 rise marks the end of a series of five 0.5% SG rate increases since the start of the 2021-22 financial year, when the SG rate was lifted from 9.5% to 10%. 

Higher transfer balance cap

Individuals starting a pension for the first time on or after 1 July 2025 will be entitled to a personal transfer balance cap (TBC) of $2 million, which will be increased by $100,000 from the current level of $1.9 million.

The TBC is the maximum amount that an individual can transfer from their superannuation accumulation account into a tax-free pension account on their retirement. Any amount over the TBC must be retained in an accumulation account, where any contributions and investment earnings are still taxed at 15%.

Keep in mind that investment earnings within the pension account can increase the account balance above the $2 million transfer balance cap without any penalty. 

Carry-forward concessional contributions

Eligible workers can “carry forward” any of their unused annual concessional super contribution cap amounts from up to five financial years ago and add them to their concessional contribution cap in the current financial year.

That means it may be possible to contribute more than the current $30,000 concessionally taxed limit, subject to you having a total super balance of less than $500,000 at 30 June of the previous financial year and you having unused concessional contributions cap amounts available.

From 1 July the starting financial year for carry forward amounts will roll over to 2020-21. As such, the deadline for taking advantage of any unused entitlements you may have from the 2019-20 financial year will end on 30 June. 

Proposed higher taxes on $3 million-plus super balances

Following its recent re-election, the federal government is likely to reintroduce its Division 296 tax bill to be passed as legislation.

The proposed Division 296 legislation would introduce an additional 15% tax on the earnings of super funds with balances above $3 million (which would apply to earnings on any amounts over $3 million). This would include any unrealised gains on assets held inside a super fund, such as shares and property, even if they had not been sold.

For help and advice for your next steps, reach out to our team here.

^{Important information and general advice warning}

^{Vanguard Super Pty Ltd (ABN 73 643 614 386 / AFS Licence 526270) (the Trustee) is the trustee of Vanguard Super (ABN 27923449966) and the issuer of Vanguard Super products. The Trustee has contracted Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) (VIA) to provide some services to members of Vanguard Super. Any general advice is provided by VIA. The Trustee and VIA are both wholly owned subsidiaries of The Vanguard Group, Inc. (collectively, “Vanguard”). The retirement savings tips provided above are general in nature and don’t take into account your personal financial objectives, situation or needs. You should consider your objectives, financial situation or needs, and the Product Disclosure Statement (PDS) and Target Market Determination (TMD) before making any decision about Vanguard Super. The PDS and TMD can also be accessed free of charge by calling 1300 655 101. Before you make any financial decision regarding Vanguard Super, you may wish to seek professional advice from a suitably qualified adviser. Any past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. The information above is current as at time of publication and was prepared in good faith and we accept no liability for any errors or omissions.}

^{©2025 Vanguard Investments Australia Ltd. All rights reserved.}

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It is intended that once passed by Parliament, the new tax – which doubles the tax rate from 15 per cent to 30 per cent for balances that exceed $3 million – will apply from July 1, 2025.

The tax change is expected to directly affect less than 0.5 per cent of investors or around 80,000 people.ⁱ

Treasurer Jim Chalmers describes the increase as “a modest change” that will make “concessional treatment for people with very large superannuation balances still concessional but a little bit less so”.ⁱⁱ

He says it will help fund other priorities such as Medicare, cost-of-living relief and tax cuts.

The Grattan Institute says tax breaks on super contributions cost the federal budget nearly $50 billion in lost revenue each year.ⁱⁱⁱ

The Institute says that, while super is intended to help fund retirement, it has become a “taxpayer-subsided inheritance scheme”. By 2060, Treasury expects one-third of super withdrawals to be as bequests – up from one-fifth today.

How will the rate be calculated?

The formula for the additional tax payment due calculates the difference between the member’s total superannuation balance for the current and previous financial years and adjusts for net contributions (which excludes contributions tax paid by the fund on behalf of the member) and withdrawals.

An earnings loss in a financial year, can be carried forward to reduce the tax liability in future years.

The calculation of earnings includes all unrealised gains and losses.

Implications for investors

The Grattan Institute says taxing capital gains as they increase removes incentives to “lock in” investments. “But it can create cash flow problems for some self-managed super fund (SMSF) members who hold assets such as business premises or a farm in their fund,” the Institute says.^iv

Many commentators speculate there will be a major change to asset allocation in super, particularly in SMSFs, as a result of the move to tax unrealised gains.

Meanwhile, one property analyst predicts a structural shift in property investment with commercial real estate becoming more attractive because of its stronger income yields relative to capital growth.^v

The new tax could also reduce the appeal of super as an inheritance tool with investors likely to explore alternative wealth transfer methods.

Navigating the changes

With the tax changes looming, we’re helping clients to ensure their portfolios will continue to meet their expectations.

For those looking to minimise their exposure to the tax, there are a number of strategies that may be useful.

These include:

1. Diversifying investments outside of superannuation by, for example, making direct investments in equities, bonds or private businesses.
2. Considering alternative retirement savings vehicles such as family trusts.
3. Actively planning to optimise tax efficiency by, for example, structured withdrawals to keep balances below the $3 million threshold, making use of tax exemptions and considering asset reallocation.

The new tax marks a significant shift in Australia’s retirement savings landscape. While the government argues that the measure is modest and targeted, its long-term implications—particularly the taxation of unrealised gains—could reshape investment strategies for high-net-worth investors.

For those nearing retirement with a high super balance, careful financial planning will be essential and all investors who could potentially be affected, should be reassessing their portfolios and weighing up whether alternate wealth management strategies may be an option.

Please get in touch if you need help navigating the changes, you can contact our team here.

i Better targeted superannuation concessions – factsheet (PDF)

ii Interview with Michelle Grattan, Politics podcast, The Conversation | Treasury Ministers

iii, iv Tax reform will make super fairer and the budget stronger – Grattan Institute

v $3 million superannuation tax change sparks property warning as ‘panic’ selling begins

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When you start to plan for retirement, you’ll need to check your super:

• where it is
• how much you have
• whether you have lost or unclaimed super
• consider consolidating accounts where relevant
• that your details are up-to-date with the ATO and your super funds.

You can do this in 5 simple steps with the ATO’s super health check. For most people it only takes a few minutes.

It’s important to know your total super balance and contributions caps, especially if you plan to contribute to your super. When you check your total super balance, take a note of your concessional and non-concessional contributions. These will indicate if you can make extra contributions or are approaching your limit.

Estimate how much income you will need to retire

The Australian Securities and Investment Commission’s (ASIC) Moneysmart website has information and tools to help you prepare to retire. You can use their:

• Super and pension age calculator to work out when you can access your super and the age pension
• Budget planner to work out your living costs
• Retirement planner to estimate your income from super and the age pension.

Your superfund may also offer a range of calculators to help you. You can access information to help you understand your finances at a free Financial Information Service (FIS) webinar run by Services Australia. You can book to attend a live webinar or watch recordings on their website.

How can I increase my super?

You can increase your super by making extra contributions. Before deciding whether to contribute extra, remember to consider your total super balance and contribution caps. Exceeding the caps may lead to extra tax.

If you decide to contribute extra to your super, the Moneysmart super contributions optimiser will help you work out which type of contribution will give your super the biggest boost.

The following contribution types may be available as options to increase your super (separate eligibility conditions apply):

• concessional and non-concessional contributions
• carry forward unused contribution cap amounts
• downsizer super contribution for people over 55 who have sold their primary residence
• government co-contributions to match your extra personal contributions (up to $500)
• a low income super tax offset (LISTO) payment (up to $500)
• spouse contributions
• capital gains tax retirement exemption contribution for people under 55 if you are selling a small business.

If you are employed, it’s important to remember that your employer’s contributions will count towards your concessional contributions cap.

You may have more than one super account. Consider consolidating your super which means combining super into one account to help save on fees.

Visit ASIC’s Moneysmart to learn more about how to grow your super.

You can also talk to us about the investment options available to help you grow your super.

Considering an SMSF to grow your super?

If you’re thinking about a self-managed super fund (SMSF) to grow your super, visit Moneysmart to learn more about what is required and to understand if an SMSF is right for you.

Accessing your super to retire

When you reach your preservation age and retire, you can access your super to fund your retirement.

You can also access your super:

• when you turn 65 years old
• if you are aged 60 to 64 years of age, under the transition to retirement rules, while you continue to work.

For more information, see Accessing your super to retire.

You can access your super as a lump sum, income stream or a combination of both. Visit Moneysmart to learn more about your retirement income.

After you retire, you may decide to return to work, and you may be able to contribute to your super again. However, it’s essential to consider how this might affect your income, including Australian Government payments (such as the age pension) and your superannuation.

You can discuss your options:

• by using the Financial Information Service – Services Australia
• with your super fund
• by contacting us to understand any potential impacts.

Each fund has governing rules. It’s essential that you talk to your super fund, or talk to us about how you can access your super in retirement and what options are available to you. If you’re a member of an SMSF, understand how you can be paid your benefits.

Tax on super benefits

The tax on super benefits depends on factors like your age, payment amount, and whether your super is taxed or untaxed. If you are 60 years old or older, your super payments may be tax free. For personalised advice, speak to us.

If you’re considering an income stream, check your transfer balance cap (TBC). Exceeding your TBC may lead to extra tax. TBC also applies to a death benefit income stream.

For more information, see Tax on super benefits.

After you retire, even if you don’t need to lodge a tax return it’s important that:

• your contact details with the ATO and your super funds are kept up-to-date
• you regularly review your super on ATO Online
• you check to see if you have any lost or unclaimed super.

Consider seeking professional advice

This information is not financial advice. We can help you make informed decisions about your super and retirement options. Reach out to our experience Retirement Advice team here.

Source: ato.gov.au September 2024
Reproduced with the permission of the Australian Tax Office. This article was originally published on https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/super-and-planning-for-retirement
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