Labor’s plan to double the tax on retirement savings balances of more than $3 million, from 15 per cent to 30 per cent, has sparked commentary suggesting superannuation is losing its appeal as an investment vehicle.
Rather, the first step will be to determine the “basis earnings”. This is fundamentally the annual movement across all of a member’s superannuation accounts over the financial year after considering specific adjustments. Negative superannuation earnings from balances above $3 million will be carried forward and used to reduce the amount of superannuation earnings subject to a Division 296 tax in future income years. Referred to as “transferable negative superannuation earnings”.Sally has a total super balance of $4 million on 30 June 2026, and a TSB of $6 million on 30 June 2027. In the previous financial year, her member account balance had gone down by $500,000 due to investment losses.
As Sally’s TSB at the end of the year is greater than the threshold of $3 million and her superannuation earnings for 2026-27 are greater than nil, she will have taxable superannuation earnings.The percentage of Sally’s taxable super earnings above the $3 million threshold will be $6 million - $3 million ÷ $6 million=50 per cent.