In a press conference yesterday (4 June), Chalmers said that although it is correct the Prime Minister had said the government was open to negotiating with the Coalition on super tax reform, the plan to tax unrealised capital gains is the “way recommended by Treasury, and it’s the way that we intend to proceed”.
“The unrealised capital gains calculation was recommended to us by Treasury. We provided years of opportunities for people to suggest different ways to calculate that liability, and nobody has been able to come up with one, and so that’s an important bit of perspective,” he said.
“Now, when it comes to the issue more broadly, this is a change which is modest. It is methodical, as I said, it’s been on the books for years now, and it makes a meaningful difference to the budget, and it helps us fund some of our other priorities.
“It’s all about making sure that the superannuation system is fairer, that it’s more sustainable. It only impacts about half a per cent of people with superannuation accounts. We put this proposal out there some years ago and there have been multiple occasions for people to propose alternative ways of calculating the liability.”
The Treasurer continued that he does not believe the concern over the proposal is “broadly and deeply felt in the Australian community”.
“We’re talking about half a per cent of people with superannuation being impacted, people with more than $3 million balances,” he said.
“We’re not eliminating tax concessions for people with big balances, we’re still providing very substantial tax breaks, just slightly less substantial. If someone’s got $3 million in super by one set of assumptions, their superannuation tax concession before this change is a bit over $14,000. After this change, a bit over $13,000, so still very generous tax concessions for people with big balances in super.”
He added that those complaining about the super tax are the “same people” who claim the government needs to abandon superannuation tax concessions and need to deliver bigger surpluses.
“My job, and the government’s job, is to make it all add up. Sometimes, that involves decisions [that] not everybody likes. And obviously, I understand that not everybody likes this change, but we have to do what’s right in response,” he said.
He added that it’s important to remember the proposed calculation of unrealised capital gains exists elsewhere in the tax system.
“It’s not new that this is the way that we are proposing to calculate it. People will say it’s about the calculation. Some people will say it’s about the indexation, but I think in a lot of instances, again, respectfully to people making these comments, and I welcome people making a contribution to the national economic debate, but I think a lot of it is not really about the method of calculation,” he said.
When questioned about the claims that the Prime Minister will be excluded from paying the Division 296 tax, Chalmers said it was “shameful” that people were suggesting this.
“We made it clear that [the Prime Minister and other politicians] are included in the legislation we released in November 2023 and in the regulations we released in March of 2024. It’s been abundantly clear in black and white that the Prime Minister is included, and people should stop lying about it,” he said.
“We’ve been clear about how defined benefits would be treated since we announced the policy. Just as the previous government did with their changes to super, we apply commensurate treatment to defined benefit interests to ensure that there are equivalent tax outcomes, and the same rules apply to everyone on defined benefit schemes without the constitutional exemption, including federal politicians.”
When it comes to the deferred liability, he said, they are consistent with the longstanding approach taken in other areas of super, like the extra contributions tax for high-income earners.
“Tax liabilities are deferred until the pension phase because members in those schemes can’t access their super to pay tax debts until that point. It’s a function of necessity, but we charge an interest rate on those liabilities to make sure that people don’t receive an inappropriate advantage from the necessity of calculating and paying those liabilities on retirement,” he said.
“The calculation reflects the same sorts of ways it’s been calculated in the past, and because the liability is paid on retirement, there’s an interest rate applied to it to make sure that there’s no inappropriate benefit.”
Well said Kym and David B. I was also involved in the consultation process and experienced the same mumbled responses to alternative ideas, the same words of sector neutrality and the same lack of hearing as a small army of Treasury staff tapped away on their laptops. I too walked away with the same tick box feeling. Borrowing from the Dire Straits lyrics, two men say they’re Jesus, one of them must be wrong. Check your facts Mr Treasurer, an election victory does not give you the option to re-write history.
Smug and clueless, our Treasurer. He’ll go out of his way to blame everyone but himself. This policy is Treasury’s fault, for example, and he could not apply his own intellectual thoughts or lack therof towards the consequences.
Dim Jim is about to go down as the worst treasurer in Australia’s history!
Taxing unrealised gains is without question the worst possible way to instill confidence in and encourage risk appetite amongst all Australians.
Until the government can show that it can rein in it’s out of control spending, the lower than anticipated revenue that this tax will generate will need to be made up somewhere else, which means companies and trusts are next.
Australia will soon be un investable, maybe that’s what they actually want.
Well, he can’t make it add up, not at the rate they throw it away.
And when he says no one has come up with a different way – he means that THIS way provides him the greatest income.
They wouldn’t touch super they said…..then they blew all our money……fairer, in a socialist’s environment. This country will be a mess in ten years.
Chalmers is so arrogant. It beggars belief his statement (repeatedly) that no alternative has been raised.
I was at the second in person consultation and raised deeming as an alternate calculation methodology. Got mumbled responses along the lines that it was “not viable”. No reasoning to provide for WHY. It is used in the social security means testing as it levels the field and simplifies the calculation. This is what is needed given the disparity between the 3 super sectors.Treasury persistently stated “sector neutrality” was their aim – deeming, as a calculation methodology for taxable income, would satisfy that stated, but not realised, aim.
At same meeting, I asked if the SMSF SAR could have an extra label added so member taxable earnings could be included so the TAX BASE could be true to form. I was simply told that changes to ATO form labels start at a price of $1m so it isn’t going to happen. I note that the ATO has had to modify the SAR to add specific pension and contribution labels so, once again, the blinkers ensured only the poorly drafted bill was standing up and money is there when it suits.
As time went on and it became apparent that Treasury (and hence the Treasurer) were not interested in productive consultation, I suggested, and still hold the view, that why not issue Regulations for SMSFs? It is needed for defined benefit funds and, because the design only (nearly) suits APRA funds, SMSFs also need additional law.
The design features favoured the APRA funds. They demanded limited system change requirements which is now not the actual reality. Systems changes are required and coders are demanding good money to engage.
So, all in all, if there was a way of calculating the cost just to implement, let alone to recover this tax, I reckon the net amount would be neutral. This is shaping up to be another FBT tax. Good in theory (tax the rich and tax dodgers) but, in reality costs more to administer.
So, Chalmers, don’t tell the industry we sat on our hands here. You sat in rooms with your headphones pumping content so loud you couldn’t hear anything.
The Division 296 will be your legacy so I hope you are proud of the work.
Sadly, we cannot be appalled by Chalmers’ comments. He has shown again and again that he is willing to lie or spin the truth. I shudder to think that he could one day be prime minister.
He has shown poor leadership as well with his inability to bring together the people of Australia, instead, intent on creating class warfare against the very people who pay the bulk of taxes in this country.
He and Treasury have not listened to us PERIOD! Perhaps his view is that he has listened, he just has not acknowledged that it has any merit. He is just content on encouraging more vitriol against us in the community to further his
own ambitions.
Chalmers is the doctor of spin itself. He will lie and spin the truth until the truth is no longer recognisable. Treasury is an embarrassment to this country, lead by a treasurer with extremely biased views against the very people that provide the bulk of tax revenue.
The Treasurer and Treasury want no one to have more than $3m in super. That is my strategy now, to acquiesce, though not willingly. I will be able to have my definition of a “comfortable” retirement without having my lifes’ savings striped from me. I see no other choice personally for my situation. Its what they want. That’s it.
Chalmers refusal to listen to experts shows his ignorance and a prime example of a spoilt brat.
It is the thin end of a wedge to apply income tax to all unrealised gains. If it gets in, where will it stop?
Garth
As an industry professional who was engaged in the consultation process, I am appalled by Jim’s comments. The terms of reference provided to us specifically stated that we could comment on anything except the level of the cap, its lack of indexation and the calculation methodology. Notwithstanding this, most of us did and were quietly told they were not listening. The consultation process was nothing more than a tick box exercise. This is clearly demonstrated by the fact that an item that we were allowed to comment on – the obvious mistake whereby a member would not be taxed in the year of death, unless they died on 30 June, was ignored.
Maybe more like Miley Cyrus with wrecking ball, this is damaging the system. Just reckless
This guy is more dangerous than Trump!