Prime Minister Anthony Albanese has announced tax on superannuation earnings for balances over $3 million will double from 15 per cent to 30 per cent from 2025.
Albanese said the changes were “an important reform” and will take effect from July 1, 2025, and will bring in the government about $2 billion in additional tax over a four-year period.
Treasurer Dr Jim Chalmers and Prime Minister Anthony Albanese announced the tax change will take effect from July 1, 2025.Credit:Alex Ellinghausen
“This proposal does not change the fundamentals of our superannuation system,” Albanese said. “99.5 per cent of people with superannuation aren’t affected by this reform, and a few thousand people will be impacted by this.
The announcement came after a tax expenditure report found tax breaks on superannuation will be worth more than $50 billion this financial year.
Treasurer Jim Chalmers acknowledged there had been a debate over the last week about the super tax concessions – the opposition has accused the government of breaking an election promise, having said they had no intention to make any changes to superannuation.
Chalmers noted the introduction of the change will come after the next election, allowing Australians to go to the polls on the issue.
He said the government was left with a budgetary mess by the previous government, and those financial pressures would ramp up over the next couple of years so it was Labor’s job to try to repair the budget.
“What the tax expenditure statement shows is that the cost in revenue foregone from super tax breaks is about $50 billion a year. And that will surpass the cost of the age pension as I’ve said before, by around 2050,” Chalmers said.
“We have a great superannuation system it is absolutely world class, but it’s not perfect. And one of the imperfections is the ongoing and growing costs of some of these tax breaks.”
“Now the tax breaks for contributions to super and earnings from super are generous, and they should be because they help people save more money for their retirement, which is what superannuation is for.
“But the cost of these tax breaks is overwhelmingly skewed towards a small number of people with high balances, with balances well beyond what’s required for a comfortable and dignified retirement.”
Chalmers pointed out that 17 people have more than $100 million in their super accounts, while one person has more than $400 million, and was at pains to stress the government was not coming after the super balances of normal Australians.
“We don’t begrudge anyone who has made a lot of money or saved a lot of money or takes advantage of the tax breaks that are legitimately available to them. We want to make that clear. If you’ve done well in super, that’s a good thing,” he said.
“We are not trying to diminish anybody’s superannuation balance. As the prime minister said, this is a prospective change that comes in in a couple of years’ time and it’s about future earnings over a certain balance that people have.”
Chalmers said the government wanted to ensure the tax system was fair.
“For any objective observer, the idea that ordinary working people subsidise incredibly generous tax breaks for people with millions and millions of dollars in superannuation doesn’t stack up,” he said.
The average superannuation balance is $150,000, but about two-thirds of Australians have less than $100,000 in their accounts.
“If you’ve got millions and super, that’s impressive. Obviously there will still be tax concessions for you. They just won’t be quite as generous as they were before,” the treasurer said.
Opposition leader Peter Dutton and other Coalition frontbenchers have attacked the government over the past week for breaking an election promise.
Chalmers pointed out the Coalition introduced its own changes to tax breaks in 2016, backed by the opposition’s shadow treasurer Angus Taylor.
“At the time, Angus Taylor said it’s totally inappropriate that someone who’s contributed millions and millions of dollars continues to get those 15 per cent concessions,” he said.
“If they want to vote against this change and try and prevent this change, then they can explain to people why they’re not prepared to back energy bill relief for pensioners, that they aren’t prepared to back people fleeing domestic violence with more affordable homes, they’re not prepared to back manufacturing jobs and a broader, deeper industrial base in this country, but they are prepared to go to war for the one half of 1 per cent of people with more than $3 million of superannuation in their accounts.
“They can explain that to the Australian people. We take our responsibilities seriously. This is about responsible economic management. We think we’ve struck the right balance here. And we’re confident that we have today.”
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