Chris Nicholl, CEO of Raine & Horne weighs up whether the proposed extra 15% tax on earnings on super balances above $3 million could impact the property market. 

Chances are you’ve come across media reports discussing the proposed higher tax rate on investment earnings for superannuation balances in excess of $3 million. 

It can all be a bit confusing. So, let’s break it down and take a look at whether it could impact the property market.

At present, investment returns earned by your super are taxed at 15%[1]. The Labor government is proposing an additional 15% tax on earnings for super accounts worth more than $3 million.

The extra 15% tax will only apply to earnings above the $3 million threshold, not the entire balance.  Even so, it means those affected could be taxed at a combined rate of up to 30% on part of their super earnings.

How many people will be impacted by the new super tax?

In a nutshell, not many.

Federal Treasurer Jim Chalmers says the average Australian currently retires with $200,000 in super[2]. It’s a long way from the $3 million balance that will attract the new tax on earnings. 

To be precise, the new tax is expected to apply to around 80,000 people[3].

That’s about 0.5% of Australians with a superannuation account[4].

Even so, some media outlets have reported ‘panic selling’ as members of do-it-yourself funds try to scale back their investments in a bid to come under the $3 million threshold[5].  

Could these asset sales impact the property market?

It’s an interesting question.

The latest Australian Taxation Office (ATO) data[6] shows that SMSFs typically have significant holdings in cash and shares.

As a guide, SMSFs collectively hold a total of $266 billion in shares and $161 billion in cash.

Not far behind though is $111 billion in commercial property holdings. 

This makes sense. Commercial property has a strong track record for delivering high, regular yields, making it an ideal asset to deliver a healthy income stream in retirement. 

These figures are all based on March 2025 data.

If we look at the proportion of different investments held by SMSFs according to fund size (ATO data from 2022-23), it’s clear that among SMSFs with over $3 million in assets (those that would be affected by the higher tax on earnings), shares account for a substantial chunk of the fund’s portfolios.

Unlisted trusts are also popular among these larger funds, whereas commercial property assets typically make up just over 10% of assets.  So while it’s unlikely that the new tax will see a ‘flood’ of properties come onto the market, it really is a case of wait and see.

What we can say is that commercial property can be well-suited to retirement portfolios. 

Should you sell your commercial property?

The decision to sell any asset in your SMSF calls for a conversation with your financial advisor and/or tax professional. 

In the current market, SMSF members who want to scale back their commercial property holdings should have no trouble finding buyers especially when supported by the advice of your local Raine & Horne Commercial team.

Alternatively, if you are looking for an investment with a proven record of high yields, low costs, long leases and the potential for capital growth, have a chat with your nearest Raine & Horne Commercial office. 

 
[1] https://moneysmart.gov.au/how-super-works/tax-and-super
[2] https://ministers.treasury.gov.au/ministers/stephen-jones-2022/transcripts/doorstop-interview-parliament-house-canberra-10
[3] https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf
[4] https://treasury.gov.au/sites/default/files/2023-09/c2023-443986-em.pdf
[5] https://www.afr.com/policy/tax-and-super/smsfs-panic-sell-assets-to-avoid-labor-s-3m-super-tax-20250513-p5lyqn
[6] https://data.gov.au/data/dataset/self-managed-superannuation-funds/resource/b545bf09-57a7-4684-b706-63c16f950e02