“The government cannot underestimate the impact of inflation on superannuation. The cumulative effect of inflation means that a dollar today has the same purchasing power as approximately $0.34 in 1985. This reduction highlights the necessity of preserving the spending power of superannuation savings over one’s working life.”

Webb added it is wrong for the issue to be portrayed as older Australians protecting their wealth, highlighting that $3 million will not represent “anywhere near” the spending power it has today.

“As awareness of this issue grows, there is a realisation that this will not be a fair system for future generations,” he said.

“Even an average earner will go on to have more than $3 million in superannuation by the time they retire. It’s simply inconceivable to think that a young Australian today will see a proportion of their retirement savings taxed at a rate of 30 per cent.”

He continued that policy changes such as this should be consistent with the legislated objective of superannuation, and this proposal appears to be driven primarily by budget repair, rather than a comprehensive approach to retirement savings policy.

“Today’s policymakers have a duty to ensure that the spending power of future retirement savings is preserved,” he said.

“Maintaining the trust and confidence of younger Australians will become harder as the benefits of today’s superannuation system are whittled away for future generations.”

Furthermore, Webb said that taxing unrealised capital gains is a fundamental breach of Australian tax principles.

“CPA Australia does not support this. Australia’s tax system is built on the principle that tax is paid on income once it is realised – when it is actually received.”

“Taxing unrealised capital gains would mean taxing people on the paper profits they haven’t yet accessed, which is not only inequitable but also administratively burdensome. CPA Australia believes this approach is inconsistent with good tax design and could have significant unintended consequences for investment and confidence.

“If this precedent is set, where are the limits? Opening this Pandora’s Box could ultimately lead to the imposition of capital gains tax on other assets and investments, even if today’s policymakers insist otherwise. It is not fair, and not healthy for the economy, if individuals are pushed into selling their investments to avoid paying tax on a hypothetical profit.”

Meanwhile, the chief executive of one of Australia’s leading online investment platforms said the proposed tax would have far broader impact than the 0.5 per cent of superannuants the government had said.

Chris Brycki, chief executive of Stockspot, said taxing unrealised gains and not indexing the $3 million threshold may catch many Australians off guard over the long term.

“This isn’t just a tax on the wealthy. It’s a tax on responsible savers. And over time, more Australians in their 30s and 40s will get pulled into the net,” he said.

He said large industry and retail funds may also face challenges under the new rules since most use pooled unit pricing, and a higher tax burden on large-balance members could flow through to everyone.

“When tax is calculated at a fund level, and not individually, it’s the smaller members who may end up bearing some of the cost,” Brycki said.

“If a fund pays more tax or is forced to sell assets to meet redemptions, it affects the unit price for every member, not just those with more than $3 million. This is one of the unintended consequences of a policy that sounds simple but has complex knock-on effects.”

He added that Stockspot has already seen SMSF trustees rethinking their strategies with many moving away from unlisted or hard-to-value assets and into listed ETFs, which are easier to manage under the new framework.

With predictions that there could be as much as $25 billion withdrawn from SMSFs, Brycki said that if large funds are forced to sell illiquid assets in a hurry, they could be selling at the wrong time.

“This is a wake-up call for Australians to re-evaluate their superannuation strategy. Even if you don’t think this applies to you today, it could in future,” he said.

“Now’s the time to review your super and think about whether your structure will work under these new rules.”