If you’ve been following the news lately, you might have heard a lot of noise about the government’s proposed changes to superannuation tax—specifically, a new tax targeting balances over $3 million.
But what does it really mean for your retirement nest egg, and why are so many Australians scrambling to sell off assets in their self-managed super funds (SMSFs)?
Let’s break down the facts, the fears, and what you need to know to protect your hard-earned savings.
What is the $3 million super tax?
The Albanese government’s plan, which could come into effect as early as 1 July, proposes two major changes for those with more than $3 million in super:
Doubling the tax on earnings: The tax rate on earnings above the $3 million threshold would jump from 15% to 30%.
Taxing unrealised gains: For the first time, a 15% tax would apply not just to income you actually receive, but also to ‘unrealised gains’—that is, increases in the value of your assets, even if you haven’t sold them.
While the government says this will only affect about 80,000 people (or 0.5% of super savers), experts warn the impact could be much broader and more disruptive than it seems.
Why are people panicking—and selling?
For many Australians, especially those who’ve worked hard to build up their super through SMSFs, these changes are causing real anxiety. Here’s why:
Forced asset sales: If you’re suddenly taxed on the paper value of your assets, you might need to sell property, shares, or even your business premises just to pay the tax bill—even if you don’t have the cash on hand.
Cash flow crunch: Many SMSFs hold illiquid assets like real estate or private business shares.
If you’re asset-rich but cash-poor, finding the money to pay a tax on unrealised gains could mean raiding your cash reserves or selling off investments at the wrong time.
Uncertainty and complexity: Accountants and financial advisers are warning that the rules around how the tax will apply—especially to private businesses and property—are still unclear.
This is making it hard for people to plan, and leading some to sell assets now to avoid future headaches.
As Ben Johnston, a Sydney-based tax planning accountant, puts it: ‘Trying to actualise unrealised gains on property, on an annual basis if that’s how it’s going to land, is going to be somewhat cumbersome as well.’
Who will be affected—and could it be you?
While the government claims only a small group of wealthy Australians will be hit, critics point out that the $3 million threshold isn’t indexed to inflation.
That means, over time, more and more people could be caught in the net—especially younger workers who are just starting to build their super.
AMP’s deputy chief economist, Diana Mousina, has calculated that even an average-income 22-year-old could be affected by the time they retire, simply due to inflation and compounding returns.
What are the broader risks?
It’s not just individuals who could feel the pinch. Industry groups warn of wider consequences:
Impact on small business and farmers: Many SMSFs own business premises, farms, or commercial property. If these need to be sold to pay tax, it could disrupt businesses, reduce investment, and even threaten jobs.
Innovation at risk: Start-ups and tech companies often rely on SMSF investment. If super funds pull back due to tax uncertainty, it could stifle innovation and growth in key sectors.
Unintended consequences: As Small Business Australia’s Bill Lang points out, ‘How do you sell a chunky asset that’s required for the running of your business?’ The risk is that people are forced into fire sales or left with big tax bills and no easy way to pay.
What’s happening in Parliament?
The legislation stalled last year, but with Labor’s recent election win and the Greens’ support, it’s likely to pass soon.
The Greens want the threshold lowered to $2 million (but indexed to inflation), while Labor’s plan is not indexed. Either way, the changes could be backdated to 1 July, so the clock is ticking.
What should you do now?
If you have a self-managed super fund, or you’re approaching the $3 million mark, now is the time to:
Review your super balance and asset mix: Talk to your financial adviser about your exposure and whether you might be affected.
Consider liquidity: If your SMSF holds illiquid assets, think about how you’d pay a tax bill on unrealised gains.
Stay informed: The rules are still evolving, so keep an eye on updates from the government and your super fund.
The bottom line
While the government says the changes are about fairness and budget repair, the reality is that many Australians—especially those who’ve worked hard to build up their super—are feeling anxious and uncertain.
Whether you’re directly affected or not, it’s a timely reminder to keep a close eye on your retirement savings and seek professional advice if you’re unsure.
Have your say
Are you worried about the proposed super tax changes? Have you made changes to your investments, or are you considering it? Share your thoughts and experiences in the comments below—your story could help others navigate these uncertain times.
Also read: Terrifying dive ahead? What this superannuation warning means for you
If someone has over $3m in their super, then good luck to them, it’s time to ‘pay the Ferryman’, just a little bit more. As to a 22 yearold being affected, I’m sure by the time he gets to retire, there will be indexation to the increased taxing level, if the Libs haven’t got back in by then, which could be questionable, they way they are at the moment.
For years they encouraged (forced) us to save for our retirement to take the burden off the taxpayer. Looks like that’s for nought with the spendthrift Labor government now coming after it and who knows what else. Doesn’t mater how much is in there, it’s yours to fund whatever retirement dreams you might have. At minimum, it’s 80000 retirements potentially curtailed (for now).
People voted in for a government with an increased majority knowing this was on their agenda.
Its time to accept the consequences of their voting decisions, as they wanted the same as the past 3 years, and more.
I don’t have much sympathy with the top 0.5%.
Super was introduced by the Keating Labor government and never got rid of by subsequent Liberal governments. Why ? Because it favors the wealthy. Simply whilst in the accumulation phase tax on profits made in super are 15% . Self sacrifice earnings up to 30K only 15% . These so called hard done workers have and will have been treated very kindly. This is a fair reset . But the rewards for the state will be minimal as we speak these so called hard done to investors will be on to their accountants to move their assets to a tax free haven.
So 0.5% of voters don’t support this change …. Fat lot of good that will do.
Yeah. First they came for the socialists and I did not speak out…
Labor is introducing taxation of unrealised gains (and double taxation of capital gains) on the small community of gypsies now and the non-gypsy attitude is a bit complacent considering the enormity of the change.
When this is a fait accompli, there will be an established and unopposed precedent in place to allow them to progress to taxing unrealised house price gains annually, for instance, perhaps starting at 3 million (perhaps less?) and un–indexed…
Perspicacity and foresight now may not be able to keep the porkies from the trough this time (too late, i fear) but at least you may see the potential of this enormous move passing under the radar. Once in, unlikely to be repealed. And unlikely to apply to our overlords – the political class.
See the list of exempted exalteds.