Clock ticks on support for rejigged super tax changes
Chancellor of the Exchequer Jim Chalmers is racing against the clock to persuade his political rivals to support pension tax changes even after the most controversial elements are removed.
Dr Chalmers published draft legislation on Friday for the proposed tax, which would double the tax on super balances over $3 million to 30 per cent and, if passed, impose a 40 per cent tax on gains over $10 million.
In October critics welcomed Labor backtracking on the most controversial aspects of the proposal, removing the tax on unrealized capital gains and agreeing to index balance thresholds.
But more than three months later, there is no sign that the Greens or the coalition are any closer to agreeing to back the new proposal.
Labor needs bipartisan support for the bill to pass the Senate.
However, Dr. Chalmers said he plans to introduce the laws to parliament “as soon as possible in 2026.”
“The changes maintain preferential treatment in retirement and make pension tax concessions more targeted for those with large balances,” he said.
Dr Chalmers is rushing to introduce the laws, with consultations ending on January 16, with the changes due to take effect from July 1.
The Greens have not yet reached a position on the new policy while they review the details of the draft bill.
But when the backflip was announced in October, economic spokesman Nick McKim accused Labor of capitulating to the richest people in the country at the expense of everyday working Australians.
Coalition support has also not materialized yet.
Although he welcomed the removal of aspects of the policy seen as more objectionable, shadow treasurer Ted O’Brien described it as a terrible money grab and expressed concerns about how it could be implemented in practice without affecting unrealized gains.
The changes will particularly impact self-managed super funds, given that only a handful of members of larger funds regulated by APRA will be affected.
The Association of Australian Superannuation Funds was confident that the Treasury’s proposed new method of calculating the tax would not result in exorbitant costs for APRA-regulated funds and would only apply to realized gains.
“There’s no doubt times are tight, but they’re manageable,” chief executive Mary Delahunty told AAP.
“We’re actually quite pleased with the way the Treasury and government have engaged with the industry on this.”
The new laws are expected to affect less than 0.5 percent of retirement account holders, about 80,000 people, with only 0.1 percent of retirement accounts subject to the higher 40 percent tax, the Treasury said.
The tax increase would also be accompanied by a separate increase in the Low Income Retirement Tax Offset, which could add about $15,000 extra to the retirement balances of more than a million low-wage workers.
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