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Just 80,000 will be hit by the impost which “does not change the fundamentals of the system”.
Government doubles tax on super balances above $3m
28 February 2023
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7 minute read
The government will tax earnings on super balances over $3 million at 30 per cent from 2025 the Treasurer and Prime Minister confirmed today after weeks of speculation about changes to the concessions.
The move doubles the standard 15 per cent tax on super earnings and is expected to hit about 80,000 Australians.
The revised impost will begin on 1 July 2025, just after the next federal election.
Prime Minister Anthony Albanese said the reform would “strengthen the system by making it more sustainable”.
“The savings that are made from this … will contribute $900 million to the bottom line of the forward estimates and some $2 billion when it is operating over the full year period,” he said.
“This proposed change does not change the fundamentals of our superannuation system – 99.5 per cent of people with superannuation will be unaffected by this reform.”
This announcement follows the release of Treasury’s consultation on the objective of superannuation last week.
Treasurer Jim Chalmers said there was no plans at this stage for the $3 million cap to be subject to indexation.
“Since coming to government, we’ve been up‑front about the challenges facing the economy and the budget,” the Treasurer said.
“We inherited $1 trillion of debt as well as growing spending pressures in defence, health, aged care and the NDIS.
“These challenges mean we need to make responsible budget choices to ensure generous superannuation tax breaks are better targeted and sustainable.
“Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent. This will continue for all superannuation accounts with balances below $3 million.
“From 2025–26, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.”
He said those affected by the increase would continue to benefit from more generous tax breaks on earnings from the $3 million below the threshold.
“This adjustment does not impose a limit on the size of superannuation account balances in the accumulation phase. And it applies to future earnings – it is not retrospective.”
“This modest adjustment is consistent with the government’s proposed objective of superannuation, to deliver income for a dignified retirement in an equitable and sustainable way.”
He said the government would introduce enabling legislation as soon as practicable and would undertake further consultation with the superannuation industry on implementation of the measure.
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- Former Labor leader Bill Shorten was honest about his policy plans, detailed them to the electorate and got slammed. Quite rightly, they were stupid. But the moral of the story is hide your real agenda. Imbeciles will still vote for you.0
- Doubles tax ... what? Let's say my fund is worth $4m, but I am retired and in pension phase and paying no tax. My pension cap is $1.7m but my fund has grown through capital growth. Let's say I earn $100k. At present I pay nil tax. Under new rules I will pay $7,500 tax. $100,000 x 1m/4m X 30% = $7,500. That is 7,500% tax rise.-1
- A lie from the ALP. Hands up those are surprised. To me, the big change is the redefinition of the purpose of the super system. The government now gets to define what a "dignified retirement" looks like. There is an old saying in Canberra - never stand between the government and a bucket of money. The biggest bucket is super, and this is only round one.1
- Entirely predictable. ALP can’t be bothered cutting spending. Their only idea, as always, is to tax more. Go after “rich” people's super. Lazy, disgraceful policy.0
- Steven Palling - not cowardly, they are taking it to an election, the next one. You might need to read the article a little more closely. Given the tax breaks that have been handed out by LNP since Howard, somebody needs to pay for running the country.0
- They would not even discuss anything like this change to super prior to the election not 12 months ago. They get elected and then do something like this. Have you seen the calculations etc? They have been sitting on this for a long time. Hence, cowardly.
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- TBC phase 2. Looking forward to this, all that complexity that came with the $1.6 million TBC will have to be rerun for a new threshold, the $3 million cap. By the time the ATO are done with the new regulations it'll be a goldmine of extra billing and time charges.0
- No worries, I'll pull the $750,000 excess out and invest it in the same investments but hold them in a company structure. The $45,000 p.a. taxable income it earns I will take as $31,500 fully-franked cash dividends, declare it in my personal tax return, and receive a refund of $7,500 in excess franking credits. That way I'll have paid an average rate of tax of 13.3% on the investment earnings instead of 30% in the super fund.0
- I find this change hilarious to be honest. If I were in this cohort, I would simply take money out of the system as soon as I could and buy a more expensive principal residence.0
- Absolute joke of a rule. Typical of the leeches we have in government from all sides of the divide. They want you to look after yourself in retirement and then make it unattractive to do so. Absolute morons who are very short-sighted. Plenty of assets means no government pension so they are doing everyone a favour.-1
- Well Diamond Jim couldn't help himself, could he? For a small increase in budget outcomes he (and Albo) have abandoned the concept of truth and certainty in the superannuation space. Forget about the fact that members have contributed for years on the basis of the current system. I look forward to the details about how the defined benefit super schemes are to be dealt with - ie, senior public servants account balances and tax imposed?0
