Following Treasurer Jim Chalmers’ October 2025 announcement, Australia’s superannuation system is set for a major overhaul — one designed to balance fairness, sustainability, and long-term stability. These Superannuation Reforms 2025 respond directly to criticism of the original plan announced two years earlier and mark a significant recalibration of how retirement savings are taxed and supported.
While the technical details may sound complex, the practical outcome is clear: higher-balance members will face steeper taxes, while low-income earners and part-time workers stand to gain from stronger incentives. For every Australian — whether managing a Self-Managed Super Fund (SMSF) or receiving contributions via your employer — it is important to understand how these reforms affect your financial future.
Key Changes at a Glance
At the heart of the reforms is the Better Targeted Superannuation Concessions (BTSC) policy. After two years of consultation, Treasury has reshaped the measure to reflect industry and public feedback.
| Reform Area | New Policy (October 2025) | Original Proposal (2023) |
| High-Balance Taxation | 30% tax on earnings between $3M–$10M; 40% on earnings above $10M | Flat 30% on earnings over $3M |
| Indexation | Both thresholds indexed to inflation | No indexation (risk of bracket creep) |
| Unrealised Gains | Removed from calculation | Included unrealised capital gains |
| Low-Income Offset (LISTO) | Increased to $810; eligibility up to $45K income | $500 offset; eligibility capped at $37K |
| Implementation Date | 1 July 2026 | 1 July 2025 |
These revisions address key concerns around fairness and practicality — ensuring superannuation remains sustainable without punishing growth or unrealised wealth.
How the Superannuation Reforms Impact You
High-Balance Individuals and SMSFs
If your total superannuation balance (TSB) exceeds $3 million, the reforms bring a two-tiered tax structure. Earnings between $3 million and $10 million will now attract a 30% concessional tax rate, while earnings above $10 million will be taxed at 40%.
Importantly, the unrealised gains tax — one of the most controversial elements of the earlier proposal — has been scrapped. This means individuals with property or other illiquid assets inside SMSFs won’t face the risk of paying tax on paper gains that haven’t been sold. Indexation also means that as inflation rises, the thresholds will increase, preventing bracket creep and offering more predictability for long-term planning.
For high-net-worth individuals, this adds urgency to review superannuation strategies, particularly around asset allocation and liquidity planning. You may wish to consider alternate investment vehicles such as discretionary trusts or investment companies, depending on your goals and time horizon.
Low-Income Earners and Part-Time Workers
One of the biggest wins from the Superannuation Reforms 2025 is the expansion of the Low Income Superannuation Tax Offset (LISTO). The offset rises from $500 to $810, and eligibility now extends to those earning up to $45,000 per year — a move expected to benefit more than 3 million Australians.
This improvement helps part-time workers, younger Australians, and women — groups that often experience interrupted work patterns — build greater retirement savings over time. Treasury modelling suggests that these changes could add up to $15,000 to retirement balances over a working life.
Employers and Fund Managers
For employers, the reforms dovetail with the Payday Super legislation, which from 2026 will require super contributions to be paid within seven business days of each pay cycle. This tighter reporting framework ensures workers’ entitlements are invested sooner — improving transparency and cash flow within funds.
Fund managers, meanwhile, face operational changes. They’ll need to calculate and report realised earnings — not total balance changes — to the ATO for any member with a super balance above the legislated thresholds. This aligns super tax rules more closely with existing income tax concepts, streamlining compliance but requiring robust data systems.
Strategic Considerations for Investors
- Review Your Balance and Growth Projections:
Use updated forecasts to assess whether your balance may exceed new thresholds by 2026. For SMSFs, consider how asset values and contributions might push you into higher tax tiers. - Evaluate Liquidity:
While unrealised gains are now excluded, the reforms still emphasise realised earnings. SMSFs holding illiquid assets should review whether future transactions may trigger larger tax liabilities. - Family Office and Cross-Border Planning:
For high-net-worth families and expats, these reforms add complexity to cross-border investment planning. Indexed thresholds and realised-based taxation help reduce uncertainty, but specialist advice remains crucial. - Model Scenarios Early:
From Q1 2026, Treasury expects to finalise legislation. Engaging a qualified adviser now allows you to model the potential tax impact and restructure holdings proactively.
Timeline: What Happens Next
- Now: Review your current superannuation balance and assess how close you are to the new thresholds.
- Early 2026: Treasury to consult further with industry on implementation details.
- Mid-2026: Legislation introduced to Parliament.
- 1 July 2026: The new reforms take effect, with the ATO issuing notices of liability for the 2027–28 financial year.
Being prepared ahead of these deadlines will make compliance smoother and allow time for informed decision-making.
Get Clarity and Confidence Through Advice
The Superannuation Reforms 2025 represent more than just tax tweaks — they reshape how Australians grow and protect their retirement wealth. For high-balance investors, it’s a wake-up call to reassess super strategies and consider diversified structures. For everyday workers, it’s an opportunity to take advantage of increased offsets and improved fairness in the system.
Regardless of where you sit, one thing remains constant: the value of professional financial advice. Understanding how these changes affect your specific situation — and taking action early — could make a meaningful difference to your future financial freedom.
If you’d like guidance on how these reforms impact your super balance or retirement plans, speak with a financial adviser at Priority Advisory Group. Our team can help you make sense of the changes and ensure your strategy remains aligned with your goals. Contact us on 1300 349 188 or visit www.priorityag.com.au/contact to book an appointment.