Labor’s super tax reform ‘moves the goalposts’ again
The Albanese government has moved to raise the concessional tax rate for superannuation balances exceeding $3 million from 15% to 30% which has received mixed feedback from industry.
Applicable from July 2025, Prime Minister Albanese stated the changes would impact some 80,000 Australians or 0.5% of super accounts and would bring in approximately $2 billion in additional tax over four years.
The announcement followed the publication of the 2022-23 Tax Expenditures and Insights Statement, which revealed tax breaks on super would total over $50 billion this financial year and were projected to exceed the cost of the Age Pension by 2050.
The proposed reform was expected to make the superannuation system “more sustainable and fairer” according to Treasurer Jim Chalmers.
“This modest adjustment is consistent with the Government’s proposed objective of superannuation, to deliver income for a dignified retirement in an equitable and sustainable way,” he stated.
Additionally, the tax breaks would apply to balances “beyond what is necessary to fund a comfortable retirement”.
Further consultation would be undertaken with the super industry and other stakeholders to settle the implementation of the measure.
In response, the Financial Services Council (FSC) warned there were still important details to be resolved with this measure.
FSC chief executive Blake Briggs said: “Australians have some certainty on the government’s plan to increase taxes on superannuation savings after today’s announcement, including that there will be an initial transitional period before the new rules come into effect.
“The FSC urges the government to commit to using the revenue raised from the $3 million cap to improve equity in the superannuation system, particularly paying superannuation contributions on the government paid parental leave scheme.”
The government should rule out punitive changes to super taxes to boost consumer confidence in the system, he added.
In a statement, Chartered Accountants ANZ (CA ANZ) questioned how Australians could be expected to invest in their superannuation when the rules routinely changed every few years.
“While the objective of bringing more equity to the superannuation system is not disputed [...] the fairness of a large attack on a relatively small number of people who followed the rules is,” the statement read.
“Having proposed an objective of super to add to the existing one already in legislation, and having commenced a consultation period just last week, more changes have been announced today.”
According to Tony Negline, CA ANZ superannuation and financial services leader, “investing in superannuation in this country is like trying to shoot a moving target flying in circles over shifting goal posts.”
“How can we ask people to invest in super now when you won’t know what rules will apply by the time people will need to access their money?”
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Rhea Nath
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no biggie Albo says, it only affects the middle aged whyte man who deserves higher tax for existing.
This seems to be a difficult rule for those affected as they cannot take the super out to make alternative arrangements. It is unfair to encourage investors to put money into super and lock it in to become more tax favorable and then when it is locked in you just increase the tax rate. Surely that cant be legal