KEY POINTS:
- People with superannuation balances above $3 million face a higher concessional tax rate.
- Starting from 2025-26, the rate will increase from 15 per cent to 30 per cent.
- Treasurer Jim Chalmers has labelled the changes as "modest".
The Albanese government will tax superannuation balances above $3 million at a higher rate as it looks for opportunities to claw back revenue.
The announcement follows a week of .
Here's what you need to know.
What do the superannuation changes mean?
The changes won't come in for another two years and will apply to about 80,000 people with superannuation balances above $3 million in their accounts.
Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent and this will continue for those with balances below $3 million.
Starting from the 2025-26 tax year, the concessional tax rate applied to future earnings for balances above $3 million will be 30 per cent.
"The modest adjustment we announce today means 99.5 per cent of Australians with superannuation accounts will continue to receive the same generous tax breaks, and the 0.5 per cent of people with balances above $3 million will receive less generous tax breaks," Treasurer Jim Chalmers said on Tuesday.
Any changes will require legislation passing parliament, and Mr Chalmers said it would come into effect after the next federal election.
The adjustment is expected to generate $2 billion in the first full year and $3.2 billion over five years.
"It's prospective on future earnings, not retrospective, and doesn't come in for more than two years," Mr Chalmers said.
Treasury analysis released on Tuesday shows the tax breaks are collectively worth up to $50 billion a year and largely flow to high-income earners.
Mr Chalmers said the government wanted to be up-front about the challenges facing the economy and the budget.
"As well as the cost of servicing a trillion dollars of debt, Australia also faces fast-rising expenditure in areas such as health, the NDIS, aged care and defence," he said.
Mr Chalmers said the government would continue the work of budget repair started in the October budget "through a combination of spending restraint, savings, and tax reform".
Jim Chalmers says the proposal is 'modest' and stresses Australians will be given the chance to vote on it.
Government targets high superannuation balances
Asked if Australians could be certain no changes were coming to superannuation that would affect more than the top 0.5 per cent of superannuation balances, Prime Minister Anthony Albanese said it was clear the government was focused on high balances.
"It's hard to argue that those levels are about actual retirement incomes, which is what superannuation was for," Mr Albanese told reporters in Canberra.
The government has spent a week publicly floating the idea of revamping the superannuation system, particularly for high earners.
In a bid to head off the Coalition's claim the changes would break an election commitment, Mr Chalmers stressed the move would come into effect after the next election.
"This policy will go to the people, and the prime minister and I think that is very important," he said.
"If [the Coalition] wants to vote against this change and try and prevent this change, they can explain to people why they're not prepared to back energy bill relief for pensioners, they're not prepared to back people fleeing domestic violence with more affordable homes ... but they're 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."
'Moving the goalposts'
But the Opposition's Treasury spokesperson Angus Taylor insisted Labor had “walked away” from an election commitment not to raise taxes on super, ruling out supporting the measure.
"It is reasonable for Australians to expect the government to keep its cast-iron election promises," he said on Tuesday.
"Having now got into government, they've decided to move the goalposts. Frankly, that's not good enough and we're not going to be part of it."
Mr Taylor suggested Mr Chalmers was also keen to scrap the scheduled stage three tax cuts, legislated under the former Coalition and supported by Labor in government.
Angus Taylor criticised changes to superannuation being floated over the past week. Source: AAP
Greens leader Adam Bandt said the Greens party room would discuss the super reform, but warned repealing the stage three tax cuts would be on the table.
Mr Bandt said it was contradictory to cite budget concerns while removing tax concessions, only to then provide them with a “frankly unaffordable” tax break.
"They have come up with a modest proposal to change superannuation tax concessions, but that money isn't going to find its way into the pockets of everyday people," he said.
"That money from the government is just going to be used to fund tax cuts for the very same people the government is targeting with the superannuation measure."
Without the Coalition’s support, Labor will need backing from the Greens to pass its super reform.
