Taxation in Accumulation Phase

As previously outlined, all concessional contributions, whether made by an employer on behalf of an employee or made as a personal contribution directly by the member, are subject to a 15% contributions tax. The contribution received by a super fund actually forms part of the assessable income of the super fund.

All investment income in the accumulation phase is also included in the assessable income of the super fund and subject to a maximum tax rate of 15%.

Super funds receive a 1/3 tax discount on capital gains where the asset is held for longer than 12 months. This brings the ‘effective tax rate’ on capital gains within super funds to only 10% (ie. two thirds x 15%).

As previously mentioned, Division 296 of the ITAA 1997 was introduced effective from 1 July 2026 as part of the Better Targeted Super Concessions legislation. The measure was introduced to reduce the tax concessions made available for members with large super balances. Effective from 1 July 2026, where a member’s total super balance (TSB) exceeds the large super balance threshold (LBST) the member will be subject to an additional tax of 15% on the proportion of earnings relating to the TSB that exceeds the LSBT. If the TSB exceeds the very large super balance threshold (VLSBT), there will an additional tax of 10% on the proportion of earnings relating to your TSB that exceeds the VLSBT. For 2026/27, the LSBT is $3 million and the VLSBT is $10 million. Both thresholds may be subject to indexation in future years.

Members with large super balances exceeding $3m or particularly $10m will need to consider whether it is still tax effective to accumulate wealth within their super funds or whether there may be other more tax-effective structures to accumulate wealth.