The outcome of the recent federal election saw the Labor Government secure a clear majority in the House of Representatives (the lower house), enabling them to press ahead with their legislative agenda. For high-net-worth Australians, one policy in particular demands renewed attention: the proposed tax on unrealised capital gains within superannuation balances exceeding $3 million per individual. 

While this proposal has been known for some time, the election result removes any legislative uncertainty. With Labor holding a majority, the introduction of this controversial measure is now all but assured. However; there is a catch. 

Greens’ Influence Curtailed in the lower house, but the Senate is a different story 

While the Greens may have less influence in the lower house, they still hold the balance of power in the Senate. On the proposed superannuation changes, they’re pushing for even more aggressive reforms—such as lowering the tax threshold to $2 million. This more extreme stance could affect a much wider group of Australians and risks undermining the core purpose of superannuation: supporting self-funded retirement. 

In my opinion this policy is disastrous for these reasons: 

1. This policy is akin to taxing someone’s salary before they have received it, or if ever for that matter. 
2. Taxing someone because it’s assumed that they can afford it does not make it right. Assets that contribute to the $3m balance may well be illiquid, and simply an ‘on paper’ value. This means nothing until the asset is sold and the cash is in the bank account. 
3. Unrealised assets often fall in value, so a super balance could be $3.3m one year and $2.9m the next without the owner seeing a dollar, yet they are taxed on what now doesn’t exist. 

If the policy must pass, we would much rather it does so on super balances of $3m rather than $2m. The Greens have indicated their intent to use their Senate influence to advocate for policies on climate action, housing affordability, and social justice, therefore; they may not oppose Labor’s proposal, but push harder on their issues they are more focused on. 

Also, while the Liberal party opposes the policy, you may well see them vote with Labor to ensure it passes at the $3m level. 

Strategic Opportunities Still Exist 

Assuming the policy passes on super balances exceeding $3 million. In a previous article, I outlined several strategic pathways for individuals with super balances exceeding $3 million. These remain as relevant as ever and include: 

• Segregating taxable and tax-free components to minimise the overall tax burden 

• Establishing family trusts or investment companies as alternative accumulation vehicles outside of super 

• Rebalancing member balances between spouses to make full use of each individual’s threshold 

• Lump sum withdrawals to stay below a $3m member balance  

These strategies require careful, tailored advice, but they offer valuable avenues for preserving wealth within a rapidly shifting tax landscape. 

An Unintended Consequence: Fuel for the Property Market? 

One issue that has not been widely discussed—but is worth highlighting—is the potential behavioural consequence of this policy: namely, the incentive it may create for individuals with large super balances to withdraw funds above the $3 million cap earlier than planned and redirect those funds into personal or intergenerational wealth transfers. 

A likely use of these withdrawn funds? Gifting to children or grandchildren for property purchases. Ironically, such a move—designed to avoid punitive taxation—may inadvertently add further fuel to Australia’s already overheated property market, particularly in capital cities where affordability remains a major concern. 

Final Thoughts 

Taxing unrealised gains on super balances above $3 million marks a major change in the way retirement savings are treated. While more extreme proposals from minor parties may have been avoided for now, the changes still signal a need for ongoing vigilance and thoughtful planning. 

If your super balance is — or is projected to be — above $3 million, now is the time to seek tailored financial advice. Acting early gives you greater flexibility to implement strategies that protect your wealth across generations, ensure compliance with changing regulations, and keep you ahead of the curve as the tax landscape evolves.