In a number of interviews on Tuesday, following the swearing in of the new cabinet, Chalmers was asked about the controversial tax that has been garnering increasing media attention since the final weeks of the election campaign.
The proposed legislation has been lambasted not just by the SMSF and financial sector but has been repeatedly criticised by the business industry, including leaders of the corporate sector.
Political opposition has also been gathering momentum, including from former treasurer Paul Keating, who was responsible for introducing compulsory superannuation to Australia more than four decades ago.
It was reported in September 2024 that Keating warned that the plan to double the tax on retirement savings over $3 million could turn superannuation into a low- and middle-income pension scheme and damage community confidence in the $3.9 trillion savings system.
However, on Tuesday, Chalmers said this government had announced the policy more than two years ago and had done extensive consultation on it.
“It is a policy that affects 0.5 per cent of people with balances above $3 million. It is still a concessional tax treatment for people. It’s slightly less concessional. And it helps us fund things like stronger Medicare or tax cuts or cost‑of‑living help, or building more homes. And so it’s an important part of our budget,” he said.
“The calculation of unrealised gains exists elsewhere in the super system. It’s not unique to what we are proposing. It affects very few people. It’s still concessional treatment. It’s been part of our budget for a little while now. It’s been before the parliament for a little while now, and we haven’t changed our approach to it.”
Chalmers said it is not unusual for tax changes to be legislated after a start date and added that he has been making the same point “repeatedly, really more or less since we first announced these changes more than two years ago”.
“This is a modest change which impacts a tiny sliver of the population.”
“And it makes an important contribution to the budget, to priorities like strengthening Medicare, the tax cuts, and building more homes. It’s been in the parliament for a long time now. It’s a modest change that impacts a tiny amount of people and still provides concessional tax treatment for people in super.”
Couldn’t agree more with these comments! Charmers is a total idiot! I’m an ex actuary and this fool knows nothing of what he’s talking about! How do you get 3 years of budget forecasts totally wrong! And now this; I’ve been an Aussie citizen (born and bred in the USA) for 40 years now; never have I seen such nonsense. Keating’s original plan for super is now toast! Im moving to Argentina! Their fiscal system is even better than here and that’s saying something! Tip, start learning Spanish!!
This policy is so much out of touch. Appears his justification is rather based on socialist ideology to me. He repeatedly keeps saying only a small minority is being impacted on, but taxing on unreleased gains is fundamentally wrong and incorrect. It will be like opening a can of worms potentially providing a mechanism that they can move onto other areas to apply the same nonsense.
Let’s even say this additional tax on high super balances is inevitable given the current deficit situation, but tax policy should be just and fair within the current conceptual framework.
That is becuase the Senate had the common sense to not pass what is a poorly created tax.
There are 2 major issues with this and its ‘spin’: 1 The policy itself has unrealised gains taxed…immoral. 2. The spin that it only affects 0.5% of people is just politics of envy and I’m sick of seeing this stupid justification for taking g money from people (like the last tax cuts debate).
I do not have $3m but its just awful…especially the spin
While I don’t think there is any justification for tax free status above a certain level (just take money out of super), i suggest it should be 2 times the transfer balance cap which was designed to be a fair amount to put it (which is crudely indexed)…which would cover major stock crashes of 50%
So the government legislates the objective of super ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’ and then introduces Division 296 that allows the individual to request that their personal liability for the tax be paid from the superfund they don’t have access to until they reach preservation age. How is the objective of “preserve savings” being met if the fund can pay the personal tax liability of the member?
It seems that the objective of “alongside government support” is not about supporting the member in their retirement, but rather a secondary objective of preserving savings that can be accessed by governments who fail to to control their spending.
There’s going to be a lot of money flooding into the housing market pushing prices even higher as people start implementing alternative strategies.
I would like to add that the government seems to forget that when people start a pension (for those are eligible), they will inherit as a couple, on top of their savings in superannuation, the equivalent of an almost $2m annuity for life. The sliver of people that Chalmers talks about that are insignificant in number to care about (but not insignificant to steal from), saved so that they could be independent of the government. Never did we anticipate that our savings would be stolen from us before we even get to retirement.
The advice I receive is that reactions should be restrained until the div.296 is enacted, most likely retrospectively.
The most spiteful but smugly satisfying plan I have encountered thus far- if all proceeds as is currently intended by Mr.Chalmers,- involves selling one’s house and depositing the funds into super, then withdrawing enough to bring the remaining super to the 3M level and spending the lot on a new primary residence.
Once the current uncertainty is removed, I am sure that more ingenious pathways will be presented due to the effort people are willing to go to just to incapacitate this awful flawed plan with its dangerous potential for normalisation of taxation of unearned income in other spheres.
Please explain:
1. How am I still getting a concession in super when the tax is more than 3.5 times the 15% tax that I presently pay in super? That is higher than any of the personal rates of tax with the addition of the Medicare levy.
2.Why did Chalmers just stand there when asked point blank in the Treasurer’s Debate by Taylor if he was still intent on introducing this tax? He literally just stood there with his mouth open looking like a deer caught in the headlights. So he didn’t have to lie to our faces? Or have to vomit some more spin?
3. Albanese only brought it up 2 to 3 days before polling day when 5m had already voted. Why did he leave it that late in the run-up to the election please?
4. If they say that they are not raiding our super but the individual member is being taxed, why is an individual potentially paying a massive tax on monies that they have never owned in their own name, and monies in fact that have never existed before except for a sheet of paper?
They are literally wanting to create a law to make it legal to steal our life’s savings – a “super theft tax”.
And I could go on and on about the many nuances of this policy and the spin associated with it in how the truth is stretched beyond recognition.
My vote went nowhere.
But so help me, I will never pay one cent of this tax, not if I can help it. It is egregiously unfair and inequitable, and we are being treated in the most heinous way, especially given that we already pay far more tax than most.
I do not care about how it makes an important contribution to the budget. I contribute more than most already and far more than my fair share. Stop wasting my hard earned taxes for all our sake and for the sake of our children and grandchildren. Without this shameful waste, you would not need to sink this low.
This is nothing more than a “Super theft tax”! It is just theft, plain and simple.
I feel sorry for those that can’t do anything to move their superannuation. But I say this to younger people now – protect your assets outside of superannuation if this comes to pass. My funds grew so quickly after more than 35 years of savings and I never in my wildest dreams thought that I could actually make it to where I am when I was 17 years old. I aimed for it, kept it in sight, and now here I am, but with a government that does not believe in aspiration and wants everyone to have the same regardless of how hard they work. And the harder that you work, the more that you will be screwed over. That’s what I got for believing the past governments. And now, I am the patsy…
I saved, worked hard and sacrificed to have it all stolen just before I can use it for myself.
…and if you have more than $3M in super, prob $6M with your wife, then you don’t need help from the rest of us.
Tax concessions are not a bottomless pit. They are funded by all us taxpayers and the rest of us are missing out on tax that you should otherwise be paying e.g. to build hospitals or fix the Storey Bridge in Brisbane!
You can both retire with $6M in super with tax free earnings on $4M and the earnings on the other $2M at 15% (& only 10% on capital gains).
You don’t need any help from the rest of us taxpayers, so yes, give some back if you’ve got more than that.
I have suggestion that would only affect an even smaller “sliver” of the population. How about we place a special tax on all Members of parliament (&Senators) where we take 50% of their balances? The rationale that this tax “only” applies to a “sliver ” of Australians is ludicrous. Superannuation is the most tightly regulated area of investment and has been so for over 50 years. Balances held in super funds have been arrived at legally and within the contribution rules, the investment rules and the tax rules. What have these people done that is somehow “wrong” to deserve the confiscation of their asset values? Nothing – it is simply the politics of envy, and the incapacity of the Treasurer to rein in spending!
The calculation of unrealised gains exists elsewhere in the super system… yes it does, but the mere calculation does not give rise to an actual tax. And if the calculation of unrealised gains does exist elsewhere in the super system then it shouldn’t be too hard for these unrealised gains to be added back when calculating the ‘notional earnings’ for the additional 15% tax.
Except, it doesn’t just affect a tiny slither of the population, because the superannuation funds and the ATO have to spend the money upfront, and on an ongoing basis, to report every single member’s superannuation balances under this regime, which will increase the costs and fees for every single superannuant from day one, even though the majority won’t ever be impacted by it.
A system designed to tax 0.5% of the population, which requires 100% of the population to have their balances reported and tracked is a poor system, regardless of any other considerations.
I have exactly the same criticism of the transfer balance cap system. It imposes massive cost and complexity on the entire superannuation and regulatory system for every superannuant, even though the vast majority of them will never be affected by it.
The fact that it affects “a tiny amount of people” is NO excuse for poor policy design Jim Chalmers. You could of heard in the preceding 2 years that there is no objection to taxing higher balance super, it is the methodology you have allowed Treasury to devise, but you choose to ignore it. Is it because you can’t get your head around what is being said? This important difference is at issue and it is your responsibility to reign in Treasury and get on with the job of being responsible for policy and subsequent legislation that is fit for purpose. You are being made a mug of and this will reflect in YOUR legacy.
The drafting is so clumsy, we in the industry are left to explain it over and over again.
Good policy design requires a look through to consequences, not just revenue saved/raised. But foremost, it should be able to be readily interpreted and not need a microscopic examination to decipher.
I don’t have any problem with limiting tax concessions on superannuation, just the way they are going about it.
The ATO already receives member balance data for all taxpayers in large and small funds, that’s how they police contribution and pension caps.
Taxing movement in member account balances was easy for politicians who may not have passed senior maths, to understand. Probably convinced by overeager treasury IT bureaucrats who convinced them they can do it easily with current data. Unfortunately change in member balance catches unrealised (on paper) gains which most countries don’t tax until the investment is sold. These politicians can’t seem to grasp that, and it’s obvious they are being misled by their minders.
Other than compulsory super, tax concessions to entice you to voluntarily save using super MUST be comparable to personal tax rules. That’s how people decide to avail themselves of tax concessions, by comparing how much tax they would pay personally, or how much better off they would be in super.
Div 296 is not comparable in any way shape or form to personal tax rates, so all the Government is doing is creating a disincentive to use tax concessions save. Super is likely a better outcome, but now a lot can’t see it because they are comparing apples to oranges.
Australia can’t afford to give away tax concessions to the rich, I agree. $6m for a couple taxed from 0% to 15% is good enough for you. But going about it this was is just plain silly to anyone who understands taxation.
[i]”Australia can’t afford to give away tax concessions to the rich”[/i]
But isn’t it “the rich” who are paying all the tax in the first place?
If a tax concession is pitched at 10% then someone paying $1,000 will save $100, but someone paying $10 will save only $1. Not sure how you classify that as unfair and inequitable – it’s just basic maths.
But then, I suppose, those paying $10 would prefer they paid nothing while “the rich” paid even more to make up the difference.
Extensive consultation??
gaslighting is a better description
So it doesn’t matter that we are screwing people and distorting the tax system as long as we only screw over a small number of people.
Equity and fairness. Bah.
Bring it in, drop it to the TBC if you wish, but index it and tax fund income only, not unrealised gains. Stop bowing to your union buddies who don’t want to pay to fix their antiquated systems.