Support for tax hike on large super accounts grows in Senate

The Treasurer says a change to super tax concessions will affect 0.5 per cent of Australians.

The Treasurer says a change to super tax concessions will affect 0.5 per cent of Australians. Photo: AAP

Australians with more than $3 million in their super accounts will pay more tax from 2025 under proposed changes, with the Albanese government’s legislation likely to pass once a deal is struck with the Greens.

Treasurer Dr Jim Chalmers released the draft legislation to increase super taxes for high earners from 15 to 30 per cent on Tuesday, after it was agreed to by cabinet in February.

Chalmers cited more than $2 billion in revenue for “targeted cost-of-living relief” as the reason for the change.

He said the changes will only affect 0.5 per cent of Australians, an estimated 80,000 people, but it still requires the support of the Greens and the crossbench in the Senate after the Liberal Party maintained its opposition to the reforms.

Investment earnings from superannuation accounts are taxed up to 15 per cent.

But the legislation will increase the tax to 30 per cent for people with a total super balance of more than $3 million at the end of each financial year from 2025-26, leaving those with less than the threshold unaffected.

‘Unrealised gains’, or investments that haven’t yet been cashed out such as stocks in companies or assets that are increasing in value, are included in the taxable income when determining a person’s total super balance.

Losses will be able to be carried forward between years to reduce tax liability, and the new tax is separate from any personal income tax paid by an individual.

Poll shows voters back super tax change

Greens want concessions

The planned changes would raise an estimated $2.2 billion, but – like every piece of legislation introduced by the Albanese government – it requires the support of the Liberal opposition or a combination of the crossbench and the Greens to pass into law.

The Greens, who have previously leveraged their balance of power in the Senate to increase investment in social and affordable housing, have signalled they will facilitate the additional tax on the condition the legislation is amended to include government-paid super contributions for people taking parental leave.

Greens Senate leader Larissa Waters said the legislation is a “timid proposed change to the tax concessions the obscenely wealthy receive”.

“Labor has said repeatedly that they want super paid on paid parental leave when budget circumstances permit,” she said.

“The expected revenue from its proposed changes to super is more than enough to cover the cost.”

People on paid parental leave do not receive contributions to their superannuation accounts, unlike those taking annual, sick or long service leave.

The addition of the payments will cost an estimated $200 million a year, and the Labor Party previously included the policy in its pre-election platform in 2021.

Labor policy

Chalmers didn’t allocate funds for it in this year’s budget, but it is likely the Labor Party will commit to the Greens’ proposed amendments in return for their support after the policy was adopted at Labor’s national conference in August.


The Labor Party added government-paid super contributions for people on parental leave to its national platform in August. Photo: AAP

If the Greens support the bill it only needs the approval of two crossbenchers for it to pass.

David Pocock, Independent senator for the ACT, has said he supports the implementation of the increased tax and the addition of paid parental leave, but he wants to see any legislation before supporting it.

Tammy Tyrrell, Jacqui Lambie Network senator for Tasmania, has also previously spoken positively about the super changes, making it likely the legislation will pass.

A broken promise?

Anthony Albanese previously promised to not make any “major changes” to superannuation during this term of government, which has triggered the shouts about broken promises from a Liberal opposition increasingly left outside of legislative decisions.

The Liberal Party has ruled out supporting the super tax changes, and shadow treasurer Angus Taylor said the government should “abandon this broken promise and rein in spending to take pressures off prices”.

“The idea that this policy change will only affect older Australians and the super wealthy is nothing but a Labor lie,” he said.

“Treasury analysis has shown a 20-year-old today who earns an average wage over their lifetime will have to pay Labor’s higher super taxes.”

The Liberal Party’s reasons for opposing the legislation included an increased amount of people affected by the tax as wages grow in the future and unrealised gains being included in calculating the total super balance.

Chalmers has positioned the changes as “slightly less generous” tax concessions for high earners and downplayed its significance because only a small portion of the population will be affected.

The changes, however, won’t come into effect until July 2025, after the date of the next federal election.

The government is consulting on the popular bill until October 18.

The New Daily is owned by Industry Super Holdings

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