We have $8m in an SMSF. How can we avoid the new super tax?

Assuming the proposed new super tax proceeds: our SMSF will hold about $8 million at June 30, 2025, with 58 per cent allocated to my account and 42 per cent to my wife’s. We’ll each draw a minimum pension of 9 per cent in 2025/26, totalling around $333,000. If we sold sufficient assets and withdrew the proceeds over the next 12 months, so the fund falls below $6 million by June 30, 2026, would that exempt us from the super tax – even though one account remains over $3 million? Also, do pension withdrawals reduce the relevant balance?

The tax is assessed per member, not on the total fund. Even if your SMSF falls below $6 million, you’ll still be liable if a personal balance exceeds $3 million.

To determine the notional earnings, the ATO will compare your opening balance at July 1, 2025 to your closing balance at June 30, 2026, adjusting for all withdrawals (including pensions) and contributions.

Even if you and your partner split the balance of your self-managed super fund, you’ll likely still be weighed down by the new super tax.Credit: Simon Letch

However, the proposed tax would only apply to the portion of these earnings that relate to the balance over $3 million. So if your notional earnings were, say, $400,000 with a closing balance of $3.4 million at the end of the period, the portion of the earnings relating to the balance above $400,000 is 11.76 per cent or $47,040, and your liability for the new super tax would be $7056.

With global political unrest threatening a potential market downturn, should we hold our share portfolio or shift a significant portion to term deposits? We’re a retired couple, aged 79 and 76, and have been retired for 16 years. Our assets include an $805,000 share portfolio generating about $40,000 a year, $177,000 in combined super earning roughly 6 per cent annually, and $15,000 in the bank. We also own cars, a caravan, and our home. We’re in good health and still active.

I appreciate that we’re in interesting times – and naturally, any conflict of the current magnitude generates massive headlines. Just remember, the sharemarket has always had a long-term upward trend, and the secret of success is staying in and riding out the normal volatile periods.

When you own shares, you’re investing in businesses, and there’s no doubt whatsoever that the major businesses making up the world’s stock exchanges will continue to prosper over the long term.

You may well have 15 years of investing ahead of you, and you’ve got plenty of assets to see you through that time. The dividends from your shares should keep coming, regardless of what the markets are doing.

Just make sure you always hold enough in the cash-type asset class, either inside or outside super, so you’re never forced to dump quality assets when the market is going through one of its inevitable downturns.

And remember – nobody can accurately and consistently predict where markets are heading.

I’m a 71-year-old separated woman. I own my home, which has been valued at around $2.4 million, and I have about $550,000 in an allocated superannuation pension. My husband, also 71, and I are considering living together again to support each other in our old age. He owns a unit valued at around $450,000, has about $200,000 in super, and currently receives the full age pension. I receive a small part pension. Would we be better off selling his unit and putting my house in both names? I realise we would probably be ineligible for a Centrelink pension.

For Centrelink purposes, you are either a couple or you are not. If your husband moves back in with you, it will be very difficult to convince Centrelink that you are not a couple – which means you would both be assessed under the couples’ income and assets test. Based on what you’ve told me, you would likely be ineligible for the age pension as a couple.

If you remain separated, however, you would probably both continue to receive at least some pension. And if he sells his unit, he would be converting an exempt asset (his principal residence) into an assessable one (cash or investments), which would make the situation worse.

I strongly recommend you seek personalised advice from a qualified financial adviser before making any decisions.

I’m unclear how the proposed new tax on superannuation applies to accumulation accounts for those who haven’t reached preservation age. Can someone with more than $3 million withdraw the excess and move it to another structure, like a trust, to reduce tax? I’ve always understood that super can’t be accessed until retirement. I’m particularly interested in how the rules apply to people who are under preservation age and whether any restructuring is possible beforehand.

The preservation rules require you to keep your money in super until you reach 60, unless you can satisfy the early access provisions, such as on hardship grounds. Provided the money is in super, it does not have to be in one specific fund.

You could always roll your balance to a super fund which you felt was better suited to your situation. Then you could rearrange the assets in the fund to suit your goals and your risk profile.

Noel Whittaker is the author of Retirement Made Simple and other books on personal finance. Questions to: [e-mail]

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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