As superannuation funds are attempting to figure out how exactly they will calculate the realised earnings for individual members to comply with the new version of the Division 296 $3 million super tax, shadow financial services minister Pat Conaghan has urged the government to “stop experimenting with your super”.
“I am concerned Jim Chalmers is replacing one broken model with another bureaucratic mess – and average Australians will end up paying for it,” Conaghan said.
Following intensified scrutiny of the originally proposed version in the wake of Labor’s election victory, the Treasurer announced the tax would no longer apply to unrealised capital gains, adding that the threshold will also be indexed and an even higher tax rate would apply to balances above $10 million.
Under the version of the tax that the Treasurer had proposed more than two years ago, all earnings above $3 million would be taxed at 30 per cent, rather than the 15 per cent under current rules. This would also apply to unrealised gains and was not subject to indexation.
The new version would see the additional tax payable only on the realised investment earnings generated by the portion of an individual’s total superannuation balance (TSB) that exceeds $3 million.
Chalmers also announced that a higher tax rate totalling 40 per cent would be payable on earnings from the TSB portion exceeding $10 million, which is expected to affect around 8,000 Australians.
Both thresholds will be indexed and the start date has been pushed back from 1 July 2025 to 1 July 2026.
Referencing reports that super funds are concerned about the administrative burden of calculating the tax obligations for individual members, Conaghan said “instead of finding new ways to tax super, Labor should focus on protecting it”.
“The Treasurer’s first super experiment – that taxed unrealised gains – was widely criticised by economists, industry leaders and taxpayers alike,” he said.
The shadow minister added that the complex administration process will drive up costs and red tape for funds, which members will ultimately end up paying.
“Your retirement savings shouldn’t be footing the bill for another Labor experiment,” Conaghan said.
“The Coalition will always back a fair, simple and sustainable super system that protects your savings and keeps costs low.”
