Article written by Sarah Davie
Associate Director & Licensed SMSF Accountant
Could Your SMSF Be Caught by the $3 Million Super Tax?
While the proposed $3 million super tax is expected to affect only a small percentage of Australians today, many SMSF investors may unknowingly move closer to the threshold over time due to rising property values, long-term investment growth and concentrated asset holdings.
For many trustees, the issue is not necessarily where their super balance sits today but where it could sit in the next 5, 10 or 15 years. SMSFs that hold high-growth assets such as commercial property, large share portfolios or long-term investments may experience significant increases in value, potentially creating future tax implications that investors may not have previously considered.
Understanding which types of SMSF investors are more exposed can help trustees review their current structure, assess future risks and make informed decisions about their long-term retirement strategy.
The 4 key investor groups:
1. Business Owners Holding Commercial Property in an SMSF
Many business owners purchase their business premises through an SMSF as part of a long-term wealth creation strategy. While this can provide strong tax and retirement planning benefits, commercial property values in Australia have increased significantly over the years, particularly in high-demand locations.
As property values continue to rise, some SMSFs may find themselves approaching or exceeding the $3 million threshold without making substantial additional contributions. Business owners who purchased property many years ago may now hold assets worth considerably more than their original purchase price, potentially increasing future tax exposure under the proposed rules.
2. Long‑Term SMSF Investors
SMSF members who have invested consistently over 15-20 years or longer are among the groups most likely to be impacted. Long-term investing allows assets to compound over time, and strong market performance can significantly increase overall super balances.
Investors who have held quality assets such as shares, managed funds or property for decades may experience substantial capital growth, even if their annual contributions have remained relatively modest. In many cases, trustees who started investing early and maintained disciplined strategies may now hold balances that are far higher than originally expected.
3. Highly Concentrated SMSF Portfolios
SMSFs with a concentrated investment strategy, such as holding a single property or a limited number of large assets, may reach the threshold more quickly due to the lack of diversification.
For example, an SMSF that owns one commercial or residential property in a rapidly growing market may experience a sharp increase in asset value over a relatively short period. Because the fund’s performance is heavily reliant on a small number of investments, significant capital growth in one asset can dramatically increase the overall super balance and potentially trigger additional tax implications.
4. Couples with Uneven Super Balances
The proposed $3 million super tax applies on an individual basis rather than on combined household super balances. This means couples with uneven super balances may still face tax exposure even when their total retirement savings appear reasonable overall.
For example, one partner may hold a significantly larger super balance due to business ownership, investment growth or higher historical contributions, while the other partner has a much smaller balance. In these situations, one individual could exceed the threshold independently, potentially creating tax implications despite the couple’s combined retirement position being relatively balanced from a household perspective.
Understanding these investor categories can help SMSF trustees assess whether the proposed $3 million super tax may affect their long-term financial plans and whether strategic advice may be beneficial moving forward.
Still got questions?
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whether a SMSF loan for property is a viable option for you.
Book a Free SMSF Strategy Session with Rogerson Kenny’s SMSF specialists today.
Or call us on (03) 9802 2533 to talk through your options.
*Disclaimer: This article is general information only and does not take into account your personal circumstances. Always seek professional advice before making financial decisions.*
Sarah Davie is an Associate Director and Licensed SMSF Accountant at Rogerson Kenny Business Accountants. She specialises in Self-Managed Super Funds and advises trustees on compliance, strategy and superannuation legislation.
