Albanese authorities broadcasts large adjustments to controversial superannuation tax: What it is advisable to know
Treasurer Jim Chalmers has unveiled a major overhaul of Labor’s controversial superannuation tax plan, after fierce backlash over fears it would punish ordinary Australians with growing nest eggs.
Super balances between $3million and $10million will still be taxed at 30 per cent, while balances above $10 million will face a higher 40 per cent rate.
Both thresholds will now be indexed to inflation, meaning they will rise over time and stop more Australians from being dragged into the higher tax bracket as their super grows.
The government has also dropped plans to tax unrealised capital gains – a move that had sparked widespread backlash from accountants and retirees.
As under the previous plan, anyone with more than $3 million in super would have been taxed at 30 per cent on their earnings.
People with less than $3 million would keep paying the normal 15 per cent rate.
But the $3 million limit wasn’t tied to inflation, so as wages and prices increased over time, more Australians would have been pushed over that threshold and forced to pay the higher tax.
‘We have always had in our back pocket indexation, or an indexation like this, in order to get it through parliament,’ Mr Chalmers said.
‘For earnings on super balances between $3 and $10m, the rate remains 30 per cent,’ he said.
‘The rate for over $10m becomes 40 per cent. So this is still a concessional tax arrangement, but it’s better targeted.
Treasurer Jim Chalmers has reworked the federal government’s controversial plan to increase taxes on large superannuation balances, following months of criticism.
‘The third change is to index both of these thresholds to maintain relativity with the transfer balance cap, which was introduced by the Coalition. The transfer balance cap is indexed to CPI.
‘We have always had in our back pocket this indexation or an indexation like this in order to get it through the parliament.
‘The fourth set of changes is to apply these new tax arrangements to realised gains.’
