Treasurer Jim Chalmers will double the tax rates paid by Australians with superannuation account balances worth more than $3 million, in a move he says is about budget sustainability and equity.
There has been an escalating war of words between Labor and the Coalition in the past week as the Treasurer has continued what he is calling a national conversation on tax breaks paid to fewer than 0.5 per cent of superannuation accounts.
“Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent,” he said in statement.
“This will continue for all superannuation accounts with balances below $3 million.
“From 2025-26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.
“This is expected to apply to around 80,000 people, and they will continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.”
On this time line, the measure would take effect after the next federal election.
Change to net budget $2 billion a year
Government figures released earlier today showed tax breaks on super cost the budget about $51 billion in forgone revenue.
Dr Chalmers said on its current trajectory, the forgone revenue would cost the budget more than the age pension within 30 years.
Prime Minister Anthony Albanese said the change would net the government about $2 billion a year.
In the past week, Labor has faced accusations of breaking election commitments, having pledged before the election that it had no plans to change superannuation.
The Coalition vowed it would oppose changes to superannuation tax breaks.
That prompted a rebuke from Liberal backbencher Russell Broadbent, who on Monday told the ABC that the Coalition should consider the policy if it would help with budget repair.
But he was adamant the government needed to take the policy to the public instead of just legislating it.
Mr Broadbent said he supported a public debate on changes to superannuation taxes to help repair a budget in structural deficit.
“If they are fair and equitable and just – I will repeat that, fair, equitable, and just – I think we should take on board what the government is offering on our behalf,” he said.
Coalition frontbencher Stuart Robert criticised Labor on Tuesday for making its announcement within a week of starting its superannuation conversation.
He said Mr Albanese had “lied to Australian voters before the last election”.
Super account with $400 million
Fewer than 1 per cent of superannuation accounts have more than $3 million. Of those accounts, the average balance is close to $6 million.
Dr Chalmers said the average account had about $150,000 and would be unaffected by the changes.
In announcing the change, Dr Chalmers highlighted one superannuation account which had $400 million in it. He said 17 people had accounts with more than $100 million.
“We don’t begrudge anyone who has made a lot of money or saved a lot of money or takes advantage of the tax breaks that are legitimately available to them,” he said.
“If you have done well in super, that’s a good thing.”
Dr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates.
But he said Treasury officials would consult with stakeholders on that ahead of the May budget.
“My intention is not to index it because we need to make superannuation more sustainable over time,” he said.
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Excellent. That’s one tax rort for the super wealthy ended several more to go.
Mr Albanese and Mr Chalmers couldn’t lie straight in bed. But then I suppose they don’t need to given they must not be able to sleep. Both of them and their cohorts as recently as yesterday claimed there would be no major changes to super. They Lied. During the election campain they were even more unequivocal, they said repeatedly there would be no changes at all to super. Now less than a week after Mr Chalmers claimed to have started a ‘discussion’, there are major changes being put in place. And the two of them smirked their way through the press conference. They have been busted!
The 80,000 people currently goinbg to be affected is just the tip of the iceberg here. Do not think for one minute they have finished messing with super and that your money will be safe. They haven’t and it won’t be.
And this excuse that super concessions almost out cost the aged pension, well that is the general idea. As super grows so the reliance on the age pension should reduce. You would expect that super concessions will cost more than the age pension simply because there will be fewer people able to claim the pension. But then, neither Mr Chalmers (who wants to reinvent a system he does not understand) and Mr Albanese (who is distracted by woke ideology) have any of the concerns that the average person has about how they will survive in retirement.
I thought Dumbo Albo and his would be treasurer stated before the last federal election that the Labor Party were going to crack down on the multi nationals to ensure they paid their due taxes. I do not recall them saying they would hound Australian taxpayers who got off their back sides and had a go. I agree a lot of people rort the tax system and should be punished accordingly.
The people whinging about this quite reasonable change in taxation are generally the “debt and deficit” disciples of the last incompetent buch which left office leaving a $trillion in debt and deficit. They are probably the same people who want more police to protect their expensive properties and cars; more doctors and nurses and, more spent on defence to cover shocking equipment purchase decisions, money to defend against sea erosion of their beachside property, and more money for private schools. But the same people don’t want to pay their share of tax.
I question whether anyone not smart enough to live very comfortably off the income from $3 million, a conservative $150,000 a year tax free, would be smart enough to amass $3 million in super plus a house in the first place.
A good and very fair change. Anyone complaining that it is unreasonable to retire on an average of $150,000 tax free annually would complain about a hail storm of gold nuggets.
It’s actually not a broken promise because it will not come into effect until 2025 so voters have the opportunity to vote it down at the next election before it comes into effect. What gets under the skin of LNP voters is they know that the electorate won’t vote it down because the majority see it as fair and Dutton and his Luddite party is unelectable with him as leader.