Superannuation Reforms: Fairer Tax and Stronger Support for Low-Income Workers

The Federal Government has announced key updates to its superannuation reform package, aimed at improving fairness and compliance across the system.

🧾 Division 296 – Tax on Large Super Balances

Effective 1 July 2026, new tax rates will apply to individuals with superannuation balances over $3 million:

• 30% tax on earnings between $3 million and $10 million

• 40% tax on earnings above $10 million

Key improvements:

• Tax will apply only to future realised earnings, not unrealised capital gains.

• Thresholds will be indexed to CPI, maintaining alignment with the Transfer Balance Cap.

• Defined benefit interests will be treated fairly.

• Exemptions for certain judges will be extended for consistency.

💰 LISTO – Boost for Low-Income Earners

From 1 July 2027, the Low Income Superannuation Tax Offset (LISTO) will be enhanced:

• Offset amount will increase from $500 to $810

• Income eligibility threshold will rise from $37,000 to $45,000

These changes are expected to benefit women and part-time workers, helping to reduce the gender gap in retirement savings.

⏱️ Payday Super – Timely Contributions

Two new bills propose aligning superannuation payments with employee pay cycles starting 1 July 2026:

• Employers must pay super on the same day as wages

• New administrative penalties will apply for non-compliance

• The ATO has released PCG 2025/D5, offering transitional support for employers during the first year

Need More Help?

These superannuation reforms mark a significant step toward a more equitable and transparent retirement system. Whether you're an employer, employee, or advisor, staying informed and prepared will be key to navigating these changes smoothly. If you have questions about how these updates may affect your obligations or entitlements, please reach out to our team for tailored guidance.