Treasurer Jim Chalmers calls a complete overhaul of his planned changes to superannuation tax concessions a “tweak”. Even Shane Warne would have struggled to spin a ball that far.
In the face of a big pushback to his plans to impose an additional 15 per cent tax on income generated on super funds with balances of more than $3 million, Chalmers has been forced into an embarrassing retreat.
First announced in 2023, Chalmers was not only going to increase the tax paid by 0.5 per cent of people who also happened to be among the nation’s wealthiest and most well-off.
He was going to tax unrealised gains, effectively the lift in the paper value of assets before the owner was able to sell them, in what would be a huge departure from the way income in this nation is taxed.
Treasurer Jim Chalmers announcing changes to the superannuation tax system at Parliament House. Credit: Alex Ellinghausen
He was also not going to index the $3 million threshold, effectively ensuring young people today would eventually get caught up in his planned tax net.
Both key elements are now gone. That’s not a tweak – that’s a wholescale renovation.
He is sticking his higher tax to real gains while the thresholds will be indexed. And to help cover the cost of his retreats, people with more than $10 million – about 8000 individuals – will actually face a 40 per cent tax rate on their holdings.
The treasurer is also tidying up an issue around the low-income superannuation tax offset and the way it interacts with the revamped stage 3 tax cuts, that would have hurt people earning less than $45,000.
Chalmers says the combination of his changes will mean that in 2028-29, instead of earning about $2.5 billion in extra revenue, the government will collect about $2 billion. Further out, by indexing the thresholds, the repair to the long-term budget bottom line is reduced, although he maintains it will still raise a “substantial” amount of cash.
How “substantial” that tweak is, only future taxpayers will find out.
