Tax Concessions for Super Funds

On 17 April 2023, the FAAA made a submission in response to a consultation being undertaken by the Government on the introduction of a higher tax rate on investment earnings for superannuation accounts with more than $3 million.

Whilst we are supportive of higher tax rates being applied to very large superannuation accounts, the challenge is with respect to the level that this should commence from and how it should be calculated.  It will inevitably be very complex to apply two different tax rates to the one fund.

The approach that has been proposed by the Government in the Consultation Paper, is that the proportion of the adjusted increase in the value of the account, above the $3m threshold, would be subject to taxation at 30%.  This is after allowing for withdrawals and contributions.  Basing this on the adjusted increase in the total value of the account, means that unrealised gains are taken into account.  This is inconsistent with all other elements of the tax system, where capital gains are not taxed until they are realised.

We are also concerned that the effective tax rate will be much more than doubling, as there will be no allowance for franking credits and capital gains discounting that would otherwise apply.

The Government has included this measure in the 2023 budget, however they are proposing that it would not start until 1 July 2025.  We will watch this process closely to see if they do change their approach to the calculation of investment earnings.

Please click here to see a copy of the FAAA submission.

For any questions on this submission about tax concessions for super funds, please email