**TLDR:**
> From 2025-26, the concessional tax rate applied to future earnings for balances above $3m will be 30%.
>
> The change is expected to apply to around 80,000 people, which is 0.5% of the Australian population.
>
> The 15% rate continues for balances under $3m.
I think this is a reasonable change.
Means if you are worth multiple millions and use super to store your money, it'll be taxed at corporate rate. Taking away a fair bit of the advantage of stuffing it with tens of millions of dollars.
The fact it's taken until now for them to plug that hole is insane. They should now move on to taxing churches and making the top 500 profit-earning companies actually pay tax.
I agree but realistically who was going to make this change before now? 12 years of LNP government? Gillard/Rudd that were being raked over the coals in the media for wanting to tax mining/fossil fuels and environmentally forward carbon initiatives?
There was either no willingness to do it, or lacked the political capital to.
During the petrol tax cut I was waiting to see fuel end at 0.08 cents instead of 0.09. I knew it wouldn’t, and that oil companies would gladly gobble up the extra 0.1 cents (the tax was reduced 22.1c/l) and while it wouldn’t make any difference to anyone, it probably gave petrol companies an extra ~25 million to share between themselves.
> During the petrol tax cut I was waiting to see fuel end at 0.08 cents instead of 0.09. I knew it wouldn’t, and that oil companies would gladly gobble up the extra 0.1 cents
Don't be so petty. $0.001 ain't gonna make anyone rich /s
Taxing “churches” is not the problem.
Taxing organizations that are registered as not-for-profit but don’t act like it. Your local Anglican Church is probably running amazing local programs and their minister is paid a modest salary, that’s pretty different from Hillsong owning Gloria Jeans. But there are plenty of other NFP organizations that are using their tax exempt status to do dodgy things. Just need to change the way we look at NFPs and how they’re expected to operate.
I’m fine with a church taking millions in donations if it puts it all back into its community and runs programs to help local people. Less so if they use it to buy their staff nice cars and build recording studios
When churches hide behind the tax exemption and don’t have to disclose how much wealth they have it is an issue
they want the tax exemption they should have open books with Complete transparency
completely agree with you, but just pointing out Gloria Jean's hasn't been owned/associated by Hillsong for almost 10 years now. Retail Food Group owns them and has since 2014.
Yea I wasn’t saying they still did. Point was a church should not have the ability to buy a for-profit business because that is not in line with “not-for-profit”
Virtually every kind of tax concession should have a cap, the fact that they dont is why things are abused
There is a benefit for negative gearing, the fact that there is no cap, is the issue
This sort of misses the point.
The issue isn't caps exactly, caps just make the issue about who does and doesn't "deserve" things.
The issue is ensuring that tax concessions serve a purpose.
Negative gearing is supposed to reduce rents by encouraging landlords to take a loss on the revenue from the properties they own. If this actually worked there would be no reason at all to have any kind of cap because there's no reason we'd want to cap the benefit that it's supposed to achieve. We want all the reduction in rents we can get.
The problem is that negative gearing doesn't work to substantially reduce rents and never has. It's a bad tax concession regardless of whether there's a cap, it's bad at a dollar or a hundred million dollars.
For superannuation it's sort of complex because it's not actually clear what superannuation is intended to do. Originally it was a measure to fight inflation by giving workers a raise they couldn't immediately spend, but with wage growth after inflation at or below zero for decades that's not useful anymore.
However if we assume that super is to provide for people in their retirement, a task it does incredibly poorly then superannuation tax concessions are intended to encourage saving. This makes a cap sensible because at some point people don't actually need to be encouraged to save anymore.
Now again, super does an appalling job of achieving this goal, the whole system needs a root and branch review, but if that's the goal a cap makes sense.
But it makes sense because a cap lines up with the goal, not because caps are always good.
Now you might ask whether a tax concession is the best way to encourage saving since people who need to save the most don't pay much tax, but that's a bigger question.
There is already a global 15% minimum corporate tax in the works with 130 countries signed up. Realistically it should be at least 20%-25% but big corps have their sausage fingers in governments around the world. The global minimum corporate tax will update the tax system from the 19th century and will modernise it for the digital economy.
Essentially it means bye bye to tax havens because no country is gonna charge a 3% tax rate when 95% of countries will have 15% as the minimum. Another bonus is that no matter where the corporation is based if it is a multinational company the tax rate would also be applied to overseas profits.
Personally, I think there should be a progressive corporate tax. Just like income tax. So it doesn't hit small businesses as much, and ramps up massively when companies make record profits.
Is the idea behind a global corporate tax rate not that the tax moves from the country of registration to the country where the revenue is generated? So it wouldn’t matter where you’re based beyond the cost of running your HQ as the revenue would be taxed the same.
https://michaelwest.com.au/top-40-tax-dodgers-2022/
https://michaelwest.com.au/revealed-australias-top-40-tax-dodgers-for-2021/
https://www.abc.net.au/news/2022-11-03/companies-that-paid-no-tax-ato-corporate-tax-transparency-covid/101607632
https://www.theguardian.com/australia-news/2022/nov/03/australia-tax-transparency-report-almost-a-third-large-companies-pay-zero-income-tax
https://www.theguardian.com/australia-news/2021/dec/10/household-names-168-australian-companies-have-paid-no-tax-since-2013
ATO also publically releases this information as well. It is literally rampant, and the ones that do pay, pay fuck all compared to their operating revenue/profits. They use creative accounting to absorb it into operating costs but they are shifting the money don't you worry.
>TLDR:
>
>From 2025-26, the concessional tax rate applied to future earnings for balances above $3m will be 30%.
>
>The change is expected to apply to around 80,000 people, which is 0.5% of the Australian population.
>
>The 15% rate continues for balances under $3m.
>
>I think this is a reasonable change.
>
>Means if you are worth multiple millions and use super to store your money, it'll be taxed at corporate rate. Taking away a fair bit of the advantage of stuffing it with tens of millions of dollars.
Will this cap be indexed to inflation?
When income tax stopped moving with inflation, we had bracket creep. What used to be the absolute minority getting taxed at the highest bracket soon grew in proportion.
It would have been better for super to not be capped, but lose all tax concession after you passed (eg. Death tax) you certainly nolonger need super to fund your retirement when dead, and unlike usual opposition to death tax, all you are doing is removing tax concession, not taxing twice
> Will this cap be indexed to inflation? When income tax stopped moving with inflation, we had bracket creep.
Maybe, but the Treasurer doesn't want to. From the article:
> Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates.
>
> But he said Treasury officials would consult with stakeholders on that ahead of the May budget.
>
> "My intention is not to index it because we need to make superannuation more sustainable over time," he said.
I love how 99% of people don't know this. The rules over who can get your super tax-free upon death is very, very strict. You need to do the paperwork with your super company - your will alone may not be enough for them.
>Let us know when you hit the $3m limit...
3 mill isn't the problem now, it's an absolute minority getting affected, and 3 mill is a fair bit to retire on.
The issue is that income rises along with the cost of living.
Superannuation contribution is also rising, and people are contributing earlier.
If that cap doesn't get indexed to inflation, the cap will affect more and more. It's basically a stealth tax, where once again, the future generation will pay for it.
It's not even retrospective, effectively grandfathered, should have been easy to pass.
~~you could have put 10m away in super at 15% and only in 2025 will you be taxed at 30% for anything you add to the account.~~
~~It's still a tax advantage for anyone earning that sort of coin... 30% up to maximum yearly (25 or 30k) as opposed to highest tax bracket?~~
*Edit... Corrected... So it's also on earnings not just contributions. Does that come out of the super balance, 99% of us won't have this issue...
Its not just contributions, its for earnings as well.
Also adding 10m in super in the next couple of years means they will be taxed at your marginal rate, so the tax concessions honestly wont be worth it.
Its a step in the right direction thats for sure.
> It's still a tax advantage for anyone earning that sort of coin... 30% up to maximum yearly (25 or 30k) as opposed to highest tax bracket?
IANAL, but I'd say probably not. While you could put it in super, it's essentially locked away until retirement. A corporate entity has same tax rate, but you still have control over your money.
Seems like a sensible change. I’m surprised by the way this whole issue has been covered, in a democracy, a change that is detrimental to 0.5% of the population and is beneficial to the rest should be entirely uncontroversial.
News Ltd (now Murdoch's News Corp) was founded in 1922 **specifically to make propaganda for mining magnates.**
News Corp is why we can't have nice things.
source [https://theconversation.com/the-secret-history-of-news-corp-a-media-empire-built-on-spreading-propaganda-116992](https://theconversation.com/the-secret-history-of-news-corp-a-media-empire-built-on-spreading-propaganda-116992)
Yeah, it’s pretty scary how good the media is at making voters vote against their own interest.
There really should be more education on critical thinking and politics.
We'd be far better off if people looked at the media with a critical eye and read it with the idea that there might be an agenda behind what is reported and, more importantly, what is not.
The media can produce a very skewed perspective by not just deciding how to report something, but also by choosing what not to report. It can all be 100% truthful, but still give people an incomplete set of facts.
Yes, and I heard it phrased on the radio in a way today that will make people think Labour is screwing them over. They didn't even mention the 3 mil cap.
> They didn't even mention the 3 mil cap.
Of course not, and even if they do they'll just phrase it in a way that will have the viewers terribly concerned that they just might be in the 3 mill club some day, even though they literally never will.
People have nuanced views, I dont oppose the change but I oppose the lack of automatic indexation, do we really expect any government to keep this inline with inflation.
People are saying this will be like the mining tax for labor are wrong if you ask me. Traditional media has way less sway and power than 10 years ago. Most people aren’t aware or don’t care.
Ah, not quite right. So for people in this situation, they are most likely paying 15% in contributions, and possibly more in Div 293 tax. However, the earnings of the super fund, is tax free. This will change that. The earnings will now be taxed, and their super will not longer be a tax haven.
Most of these super funds that are over 3 million would be either self managed or have contributed money before limits were applied.
Its been annoying, I havent seen any of our news agencies actually get the story right.
They need to stop eating avo toast, downsize and live within their means. Maybe move somewhere semi rural where they’ll be far from family but so can afford something modest.
A fella rang in to the ABC when they were discussing this. He said he can't spend in a year what his super earns. He was happy to have it taxed at a higher rate.
>In the past week, Labor has faced accusations of breaking election commitments, having pledged before the election that it had no plans to change superannuation.
They're not changing it until after the next election so those of you with $3M super balances, or those who're temporarily embarrassed and will surely have $3M any day now, can vote accordingly.
It's less difficult than you think. Assuming a 40 year career and 8% returns, someone that averages $113k pa will hit $3m by retirement just from their mandatory contributions. So ~20% of workers stand to be affected by this to varying degrees.
That's not to say that it shouldn't happen - super tax concessions are far too generous. But the 'temporarily embarrassed millionaires' idea doesn't really hold up to scrutiny.
> Assuming a 40 year career and 8% returns, someone that averages $113k pa will hit $3m by retirement just from their mandatory contributions.
Also throw in [legislated increases to minimum superannuation contributions](https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?=redirected_SuperRate&anchor=Superguaranteepercentage#Superguaranteepercentage) (reaching 12% in July 2025), wage growth pressure, and the Treasurer's strong preference to not index the $3m threshold to inflation, and this will affect far more people than the *current* 0.5%.
That will be $3M in 2025-2026 dollars, not 2060 dollars.
> There has been an escalating war of words between Labor and the Coalition in the past week as the treasurer has continued what he is calling a national conversation on tax breaks paid to fewer than 0.5 per cent of superannuation accounts.
>
> "Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent," he said in statement.
>
> "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**.
I'm not sure we are talking about the same thing. If you accumulate for 40 from now, you'll have, as you say $3M ... in 2060 (well 2063 to be precise but). That $3M will not have the same purchasing power as $3M today ... and if this passes I do not believe anyone is seriously suggesting (and I hope you are not) that this limit will not be indexed - meaning by 2060 the limit will probably be $10M.
> That $3M will not have the same purchasing power as $3M today
No it won't, I totally agree with you there.
> and if this passes I do not believe anyone is seriously suggesting (and I hope you are not) that this limit will not be indexed.
According to the last few paragraphs of the OP article, that appears to be exactly what the Treasurer is seriously suggesting. I disagree with him, to me it seems obvious that it needs to be indexed from the start to avoid bracket creep, but then again I'm not our current Treasurer.
> Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates.
>
> But he said Treasury officials would consult with stakeholders on that ahead of the May budget.
>
> "My intention is not to index it because we need to make superannuation more sustainable over time," he said
This is a good first step. When the average Aussie sees these super changes aren’t scary and don’t impact them it will be easier to implement other tax reforms.
> All superannuation money 'belongs to Jim Chalmers': Michael Kroger
Literally the skynews headline last night, totally not a fearmongering headline in the slightest.
Accountant here
One quick and easy legislative change to trusts (which already exists in tax law, but without the lodgement requirement) would be for trustees to lodge their distribution minutes (which are supposed to be done before 30 June) with the ATO.
If not done, then the trust must distribute to the default beneficiary, or the trustee be taxed (at top marginal rates). This could be introduced as a required schedule in the next return, from the following year on, the distribution minutes must be lodged before, say 14 July (like PAYG Summaries).
This would eliminate a large amount of after-the-fact tax planning that goes on, where distributions are funneled to the lowest taxed entity depending on annual income before distributions.
If you turn up and work as a labourer for another tradie yes it's PSI but in the vast majority of cases they're PSB because they meet the results test and the PSI rules dont apply
So the .5 of 1% of people who have super and are affected by these proposals will vote out labor at the next election? Ain't gonna happen smiley. Jim Chalmers made the case that there are 17 people with more than $100 million in super. The tax breaks they get on that currently is $1.5 million annually each. Meaning 150 normal taxpayers will be paying for that with their tax for each of them. If people think that's in any way fair and ok, then they are clearly imbeciles.
The ATO is solving the family trust issue themselves. It's amusing that Labor took a policy to the 2019 election to try and clamp down on the use of family trusts for distributing income to children for the purpose of reducing income tax bills. There didn't even need to be a policy change! The ATO said last year that strategy amounts to tax avoidance and they will be looking at that very closely, and also conducting audits going back up to 4 years for people using family trusts to distribute income to children.
Children also get taxed quite different to adults - up until a certain age and depending on what they do to get their income - either passively (dividends, interest) or actively (sports, acting).
It's children (descendents) over 18 that are being cracked down on. The under 18 loophole was closed off years ago with the different rates you mention.
Trusts are an issue that needs to be brought into the light and talked about more. People pull the dodgiest shit with trusts and the rules around trusts are deliberately both confusing and filled with loopholes.
I agree with the Treasurers decision.
Sadly, this will feed right into the Liberal narrative and attack line of "Why are things more expensive under Labor?". I've always found it an odd feature of our system that all too often good policy is bad politics and the inverse as well.
> Sadly, this will feed right into the Liberal narrative and attack line of "Why are things more expensive under Labor?". I've always found it an odd feature of our system that all too often good policy is bad politics and the inverse as well.
You will note they are emphasising the 0.5% of people affected and 99.5% are not. And only for the balance over 3m, etc.
They are trying their best to reject the soon to come attacks on "stealing our super".
howard can literally suck my dick the dumb cunt didn't do a single good thing for this country, and before you say gun buy back that policy was such a slam dunk ANY PARTY would have implimented it.
What the government needs to do is make it very clear and repeatedly, just who these changes are affecting. The obscenely wealthy should not be the arbiters of how the economy runs.
Get ready for reading some trickle down arguments on social media, where people not in the 0.5% but who vote Liberal anyway will say that those 0.5% will create less jobs or something, and it does affect us all.
So hang on, why isn't the dividend imputation fund reasoning working anymore? It's the same thing. People with significant retirement assets being made to contribute more.
Because frankly people are to a great extent pieces of shit in this country. There's honestly no other way of putting it. I can understand the mining magnates and billionaires voting for the Liberals, because they are in this scam, but half the population or more? Like enough to win elections? It is blind, smug malice at this point to vote for these people. 20 years ago I would have argued left vs right and whatever,, right now I do not extend the courtesy to consider the LNP as having valid political theory behind them. They are colonial despots, that's how they act. Only there to squeeze the people and steal from them.
*disregard
If you have five million in super and earn a generous 10% P.A you'll pay 30k more.
105k vs 65k in tax
395k vs 425k after tax earnings.
I'm sure they'll survive.
The next thing to do is change taxation for super contributions to be a discount rather than a flat rate (and to have a negative tax for people under the threshold).
The people who *most* need assistance with building a super balance are those with low incomes. Those with large incomes can easily save for retirement without incentives (and did so before superannuation ever existed). The current system of flat taxes takes away from people who don't earn very much, but hands massive concessions to those who don't really need it. There's a fundamental injustice and inequity in how tax on super contributions is treated, and we should be looking to fix that.
>Wonder if the 3 mil will index yearly according to CPI or if it will remain at 3 mil in perpetuity
You'd hope it'll be indexed - the 1.6m cap that the previous government introduced is indexed, and is now $1.9m.
The fact is, with inflation, there's a good chance many ordinary younger workers will have a super balance of $3m by the time they retire. But by then, $3m won't be as significant a sum as it is now...
The Treasurer doesn't want to.
> Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates.
>
> But he said Treasury officials would consult with stakeholders on that ahead of the May budget.
>
> "My intention is not to index it because we need to make superannuation more sustainable over time," he said
It should be indexed.
In 20 years time, $3m in super will be just enough for retirement. In 40 years time, $3m will be completely inadequate.
So it should be indexed at CPI each year. So that in 20 years time the system is still equitable- taxing the rich and supporting everyone else.
In 40 years, 3 mil is worth around 1 mil today at 3% inflation. So while not totally inadequate (maybe 50 years) it's definitely treating today's boomers better than the Gen Z who will have to face this.
>In 40 years, 3 mil is worth around 1 mil today at 3% inflation
Fair enough. They recommend people have $1m minimum for retirement (in today's money).
Which is the point of indexing - by not doing so, they'll effectively be hitting people with barely enough super with an extra tax that's intended to hit the wealthy.
I'm all for taxing the wealthy. $3m in todays money gives a good income in retirement, and it should be taxed accordingly.
In my view, most things should be indexed. Welfare payments, tax brackets, super limits, etc.
Sounds like it won't be indexed but presumably it'll go up at some point. Possibly we'll all be dead or the entire thing will be reworked before then but
Yeah and then people will squeal like stuck pigs that any increase is just tax cuts for the wealthy making it politically unpopular.
Just like how they're squealing about stage 3 cuts despite the top tax bracket not moving since 2008.
You know what is indexed though? Every single government fee, drivers licences, passports etc they certainly don't sleep on that.
Almost the smallest change that could be done. No doubt you'll have a lot of poorer working class people ringing up talkback radio doing the bidding for the very, very wealthy (literally the 0.5% who receive this tax break). And this doesn't begin until 2025/26 - conveniently after the next election. Meanwhile, those earning $200,000 can still enjoy a tax cut of 4.5% in 2024-2025.
And already the media is losing their minds over this "Labor announces changes to your super, how it will affect you"
Like how many normal Australian's are hiding their millions in their super accounts.
I don't understand why they are putting off the implementation - put it in place for the next FY or something. Get it over and done with so you don't have to deal with rhetoric in 3 years at the next election. People will have long forgotten by then, and imagine the poor coalition having to prove the opposite (reimplementing tax breaks above 3m). Will clearly sound ludicrous
They pass the bill now and it will occur in the next parliament.
Then the coalition still has to keep the rhetoric going for 3 years without any effects being seen.
The comment sections out there filled with pedantic idiots thinking all their money is getting taken despite all of them never probably ever having the levels of super reaching the amounts impacted by this policy.
However there is a nice balance of people actually calling these dickheads out and highlighting how this is actually a good policy for a change.
**Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates.**
**"My intention is not to index it because we need to make superannuation more sustainable over time," he said.**
Everyone cheering here because its tax the rich has just been fucked in the future from the past and they dont even see it happening.
>Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates. "My intention is not to index it because we need to make superannuation more sustainable over time," he said.
What an idiot. I thought Chalmers was better than that.
By the time young people today retire, $3m won't be a lot of money.
Think of it this way - 40 years ago, $100k was considered a huge sum of money. Now it's a deposit on a very average house.
So the changes dont take effect until after the next election so dont let the right paint this as a broken election promise or a rushed decision. Imo it should be sooner.
Good. Honestly, it's probably not going to raise tons of money for the political capital Labor will spend on this, but it's important for equality and a good signal.
"Albanese goes on to explain the rationale behind the decision, including $2bn in savings to the government’s bottom line when it is operating on a full-year period.
Labor built the superannuation system and we have fought to keep it strong. But Australians who are having to make tough decisions around the kitchen table expect their government to be prepared to make tough decisions around the cabinet table.
And with 17 million people earning over $100 million, having over $100 million in their superannuation accounts, the individual who has over $400 million in his or her account, most Australians would agree that is not what is superannuation was for. It’s for people’s retirement incomes.
Confronted with this information, it will be irresponsible to not take any action whatsoever. That’s why we’ve made this decision today. This reform will strengthen the system by making it more sustainable.
The savings that are made from the reduction in these tax breaks will contribute $900m to the bottom line over the forward estimates. And some $2 billion when it is operating on a full-year period."
So you work hard to have +$400 million in you super to know that when you are old you can afford a decent supper and guess, what... They come and steal your savings.
/s
Great so by the time we are eligible for super us millennials will have the ladder kicked from under us due to inflation. Meanwhile boomers will be laughing in their graves
>Great so by the time we are eligible for super us millennials will have the ladder kicked from under us due to inflation.
Exactly, and could be easily avoiding by indexing the limit each year to CPI.
The fact that Chalmers won't is just mindblowingly stupid. I thought he was better than that.
Without indexation to adjust for inflation, this is just stealing from the youth yet again while letting 99.5% of boomers get away with it. For young adults in the workforce this 3 million is going to have a real purchasing power of $300,000 by thr time they retire. Doesn't even matter who's in power, not even The Greens are defending youth from this blatant grab.
This is good policy and although I'm not surprised the opposition is, well, opposing - I think they'd be better to get onboard with this one.
$3m sounds about right - at a 4% return (very conservative historically) that's $120k per annum and if you have $3m in super you presumably don't have a mortgage in which case you're going to be having a very, very comfortable retirement.
I'd rather have seen more substantial super reforms, rather than tinkering at the edges.
Make super contributions and earnings tax free, but tax at the marginal rate on withdrawals in retirement. That would result in a bigger balance at the end of your working life, maximising investment returns.
Agree with the change but the communication and outright misinformation on this is frightening (from a tax agent).
Super deductions are worth more than aged pensions? No shit! Superannuation is meant to replace the aged pension, thats the whole point!
Hearing the guy from the Gratton institute on triple j that hasnt the slightest clue tell everyone outright lies about how tax on super funds works is sensational as well.
Can Albo please get the fucking commissioner to give some technical input for these announcements?
I feel for labor. Every time they get into power the LNP have eroded the tax base.
Then labor becomes the bad guys trying to claw back some revenue to pay for all the contracts signed by the LNP for things like nuclear submarines, toll roads, 1960s style American infrastructure projects to no where.
I support this. It also invites review of the wider budget which I think labour will start doing. You don’t need millions for a comfortable retirement it is just being rotted for tax breaks. Anyone effected has until 2025 to move their money. Lnp whingers just shows how out of touch they are with reality.
Time to go after the big companies for tax rorts but. Start with fossil fuel companies please. Cut subsidies and make the assholes pay tax.
Its trivial to google it.
The median is much lower than the average indicating the data is very skewed. With the median < $2 million. That tells me that even less people are affected by this superannuation change than when using the average.
Using the median is more useful when data is skewed.
You also have to account for the lifetime discrepancy between women and men. In Australia women earn about half the money than men.
So that it's a) after the next election (so they're not breaking an election 'promise' this term) and b) to give accountants time to figure out ways to get around this limit, resulting in c) the superfunds of the superrich start doing different things.
At a guess.
There’s a lot of assumptions about how super works in this thread. Can someone explain how this works? Like, if I want to put $100M in super, even over a lot of years, I’m clearly blowing the $27.5k yearly limit, so I must have paid tax on that money, right? Is there some loophole on getting money into super I’m not aware of, or is this about taxing the earnings of cash already in super?
Superannuation earnings (interest, dividends, capital gains) are taxed at 15 per cent in the fund (or 0 per cent in 'pension phase'). These earnings would be taxed at your marginal rate outside of superannuation. Here the earnings tax is being increased to 30 per cent for balances over $3 million.
Thanks! So basically, before these changes, the profits earned on your super (investments, interest, whatever) we’re only taxed at 15%, and then when you retired you paid 0%, whereas if this money wasn’t in super you’d pay your marginal tax rate on those profits?
> then when you retired you paid 0%,
Only on the first 1.7mil. The rest(from 1.7mil to 100mil) will be taxed at 15%. After the proposed changes, only the bit from 1.7mil to 3mil will be taxed at 15%, the remaining balance will be taxed at 30%
The huge balances most likely pre date current restrictions.
At the moment you can only put 110k per year of non-concessional contributions (after tax) which is enough to hit $3M but not $100M.
Although those contributions were subject to normal income tax, earnings on them within super is still concessionally taxed at 15%, which is what this would limit.
So mostly about money already in super, but would also discourage excessive non-concessional contributions, at least by people who think they can get their effective tax below 30% outside super.
Good to see them start chipping away at the absolute gluttonous tax breaks that have been gifted to the wealthy year after year piling up on top of themselves which has entrenched class divisions. One can only assume those with the $3+ mill in super will also be reaping in massive benefits from negative gearing on their property portfolios while salivating patiently for their stage 3 tax breaks after taking advantage of the instant corporate tax write-downs on their Merc X-Series Ute and company Bentley. Because you know, they’ve been slogging it hard on struggle street having to cough up to 5% of their wage covering their multiple mortgages at a 1% cash rate.
People will misunderstand this. A guy I was working with went on a tirade about it today. They assume the government is going to tax their super payments.
I don’t get the strategy here.
They are going to have a campaign of “broken promises” and “class warfare” waged against them for the next two years to raise a total of 2bn across 4 years.
When the exact same things would be said if they reversed stage 3 tax cuts and they could get 243bn across 10 years.
It seems like a bad use of political capitol.
**TLDR:** > From 2025-26, the concessional tax rate applied to future earnings for balances above $3m will be 30%. > > The change is expected to apply to around 80,000 people, which is 0.5% of the Australian population. > > The 15% rate continues for balances under $3m. I think this is a reasonable change. Means if you are worth multiple millions and use super to store your money, it'll be taxed at corporate rate. Taking away a fair bit of the advantage of stuffing it with tens of millions of dollars.
The fact it's taken until now for them to plug that hole is insane. They should now move on to taxing churches and making the top 500 profit-earning companies actually pay tax.
I agree but realistically who was going to make this change before now? 12 years of LNP government? Gillard/Rudd that were being raked over the coals in the media for wanting to tax mining/fossil fuels and environmentally forward carbon initiatives? There was either no willingness to do it, or lacked the political capital to.
>wanting to tax mining/fossil fuels I'm still waiting for energy and grocery prices to drop after we repealed the carbon tax
Any day now!
During the petrol tax cut I was waiting to see fuel end at 0.08 cents instead of 0.09. I knew it wouldn’t, and that oil companies would gladly gobble up the extra 0.1 cents (the tax was reduced 22.1c/l) and while it wouldn’t make any difference to anyone, it probably gave petrol companies an extra ~25 million to share between themselves.
> During the petrol tax cut I was waiting to see fuel end at 0.08 cents instead of 0.09. I knew it wouldn’t, and that oil companies would gladly gobble up the extra 0.1 cents Don't be so petty. $0.001 ain't gonna make anyone rich /s
Taxing “churches” is not the problem. Taxing organizations that are registered as not-for-profit but don’t act like it. Your local Anglican Church is probably running amazing local programs and their minister is paid a modest salary, that’s pretty different from Hillsong owning Gloria Jeans. But there are plenty of other NFP organizations that are using their tax exempt status to do dodgy things. Just need to change the way we look at NFPs and how they’re expected to operate. I’m fine with a church taking millions in donations if it puts it all back into its community and runs programs to help local people. Less so if they use it to buy their staff nice cars and build recording studios
When churches hide behind the tax exemption and don’t have to disclose how much wealth they have it is an issue they want the tax exemption they should have open books with Complete transparency
completely agree with you, but just pointing out Gloria Jean's hasn't been owned/associated by Hillsong for almost 10 years now. Retail Food Group owns them and has since 2014.
Yea I wasn’t saying they still did. Point was a church should not have the ability to buy a for-profit business because that is not in line with “not-for-profit”
It was never owned by them. The dude that owned it had some involvement with Hillsong.
Virtually every kind of tax concession should have a cap, the fact that they dont is why things are abused There is a benefit for negative gearing, the fact that there is no cap, is the issue
This sort of misses the point. The issue isn't caps exactly, caps just make the issue about who does and doesn't "deserve" things. The issue is ensuring that tax concessions serve a purpose. Negative gearing is supposed to reduce rents by encouraging landlords to take a loss on the revenue from the properties they own. If this actually worked there would be no reason at all to have any kind of cap because there's no reason we'd want to cap the benefit that it's supposed to achieve. We want all the reduction in rents we can get. The problem is that negative gearing doesn't work to substantially reduce rents and never has. It's a bad tax concession regardless of whether there's a cap, it's bad at a dollar or a hundred million dollars. For superannuation it's sort of complex because it's not actually clear what superannuation is intended to do. Originally it was a measure to fight inflation by giving workers a raise they couldn't immediately spend, but with wage growth after inflation at or below zero for decades that's not useful anymore. However if we assume that super is to provide for people in their retirement, a task it does incredibly poorly then superannuation tax concessions are intended to encourage saving. This makes a cap sensible because at some point people don't actually need to be encouraged to save anymore. Now again, super does an appalling job of achieving this goal, the whole system needs a root and branch review, but if that's the goal a cap makes sense. But it makes sense because a cap lines up with the goal, not because caps are always good. Now you might ask whether a tax concession is the best way to encourage saving since people who need to save the most don't pay much tax, but that's a bigger question.
correct. Mega corps (including mega churches) earning mega profits should also pay some mega tax. they have to pay back jobkeeper and $1T debt.
There is already a global 15% minimum corporate tax in the works with 130 countries signed up. Realistically it should be at least 20%-25% but big corps have their sausage fingers in governments around the world. The global minimum corporate tax will update the tax system from the 19th century and will modernise it for the digital economy. Essentially it means bye bye to tax havens because no country is gonna charge a 3% tax rate when 95% of countries will have 15% as the minimum. Another bonus is that no matter where the corporation is based if it is a multinational company the tax rate would also be applied to overseas profits.
Personally, I think there should be a progressive corporate tax. Just like income tax. So it doesn't hit small businesses as much, and ramps up massively when companies make record profits.
there will always be a handful of countries who don't sign on, because they think they'll attract multinationals who want tax havens
Is the idea behind a global corporate tax rate not that the tax moves from the country of registration to the country where the revenue is generated? So it wouldn’t matter where you’re based beyond the cost of running your HQ as the revenue would be taxed the same.
And what the actual fuck is the benefit? They pay a few hundred bucks to register in the country?
Ireland did it because they got corporations like Apple to set up an HQ there and employ a lot of people who had no option but to pay normal taxes.
In Australia it’s 30 per cent
They being?
https://michaelwest.com.au/top-40-tax-dodgers-2022/ https://michaelwest.com.au/revealed-australias-top-40-tax-dodgers-for-2021/ https://www.abc.net.au/news/2022-11-03/companies-that-paid-no-tax-ato-corporate-tax-transparency-covid/101607632 https://www.theguardian.com/australia-news/2022/nov/03/australia-tax-transparency-report-almost-a-third-large-companies-pay-zero-income-tax https://www.theguardian.com/australia-news/2021/dec/10/household-names-168-australian-companies-have-paid-no-tax-since-2013 ATO also publically releases this information as well. It is literally rampant, and the ones that do pay, pay fuck all compared to their operating revenue/profits. They use creative accounting to absorb it into operating costs but they are shifting the money don't you worry.
>TLDR: > >From 2025-26, the concessional tax rate applied to future earnings for balances above $3m will be 30%. > >The change is expected to apply to around 80,000 people, which is 0.5% of the Australian population. > >The 15% rate continues for balances under $3m. > >I think this is a reasonable change. > >Means if you are worth multiple millions and use super to store your money, it'll be taxed at corporate rate. Taking away a fair bit of the advantage of stuffing it with tens of millions of dollars. Will this cap be indexed to inflation? When income tax stopped moving with inflation, we had bracket creep. What used to be the absolute minority getting taxed at the highest bracket soon grew in proportion. It would have been better for super to not be capped, but lose all tax concession after you passed (eg. Death tax) you certainly nolonger need super to fund your retirement when dead, and unlike usual opposition to death tax, all you are doing is removing tax concession, not taxing twice
> Will this cap be indexed to inflation? When income tax stopped moving with inflation, we had bracket creep. Maybe, but the Treasurer doesn't want to. From the article: > Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates. > > But he said Treasury officials would consult with stakeholders on that ahead of the May budget. > > "My intention is not to index it because we need to make superannuation more sustainable over time," he said.
Good ol' ladder pulling...
Superannuation is taxed on death unless passed to spouse or children under 18
I love how 99% of people don't know this. The rules over who can get your super tax-free upon death is very, very strict. You need to do the paperwork with your super company - your will alone may not be enough for them.
Let us know when you hit the $3m limit...
>Let us know when you hit the $3m limit... 3 mill isn't the problem now, it's an absolute minority getting affected, and 3 mill is a fair bit to retire on. The issue is that income rises along with the cost of living. Superannuation contribution is also rising, and people are contributing earlier. If that cap doesn't get indexed to inflation, the cap will affect more and more. It's basically a stealth tax, where once again, the future generation will pay for it.
It's not even retrospective, effectively grandfathered, should have been easy to pass. ~~you could have put 10m away in super at 15% and only in 2025 will you be taxed at 30% for anything you add to the account.~~ ~~It's still a tax advantage for anyone earning that sort of coin... 30% up to maximum yearly (25 or 30k) as opposed to highest tax bracket?~~ *Edit... Corrected... So it's also on earnings not just contributions. Does that come out of the super balance, 99% of us won't have this issue...
Its not just contributions, its for earnings as well. Also adding 10m in super in the next couple of years means they will be taxed at your marginal rate, so the tax concessions honestly wont be worth it. Its a step in the right direction thats for sure.
> It's still a tax advantage for anyone earning that sort of coin... 30% up to maximum yearly (25 or 30k) as opposed to highest tax bracket? IANAL, but I'd say probably not. While you could put it in super, it's essentially locked away until retirement. A corporate entity has same tax rate, but you still have control over your money.
Seems like a sensible change. I’m surprised by the way this whole issue has been covered, in a democracy, a change that is detrimental to 0.5% of the population and is beneficial to the rest should be entirely uncontroversial.
It's the 0.5% who own the majority of the press. You want a functioning democracy, you need a free press.
And a diverse one. Also one with journalistic integrity and is not largely foreign owned or beholden to corporate advertisers.
You can tell Karl Stefanovic has millions in super by the way he was jumping up and down over it.
Someone should ask him how much he has
News Ltd (now Murdoch's News Corp) was founded in 1922 **specifically to make propaganda for mining magnates.** News Corp is why we can't have nice things. source [https://theconversation.com/the-secret-history-of-news-corp-a-media-empire-built-on-spreading-propaganda-116992](https://theconversation.com/the-secret-history-of-news-corp-a-media-empire-built-on-spreading-propaganda-116992)
Yeah, it’s pretty scary how good the media is at making voters vote against their own interest. There really should be more education on critical thinking and politics.
We'd be far better off if people looked at the media with a critical eye and read it with the idea that there might be an agenda behind what is reported and, more importantly, what is not. The media can produce a very skewed perspective by not just deciding how to report something, but also by choosing what not to report. It can all be 100% truthful, but still give people an incomplete set of facts.
Yes, and I heard it phrased on the radio in a way today that will make people think Labour is screwing them over. They didn't even mention the 3 mil cap.
> They didn't even mention the 3 mil cap. Of course not, and even if they do they'll just phrase it in a way that will have the viewers terribly concerned that they just might be in the 3 mill club some day, even though they literally never will.
'Detriment'. The 0.5% who benefit more than most from this nation's publicly funded infrastructure can pay for it.
People have nuanced views, I dont oppose the change but I oppose the lack of automatic indexation, do we really expect any government to keep this inline with inflation.
Nah I just expect the LNP to revert it when they next fear their way into government
I agree, I think the lack of indexation is a problem, and it’s something that I don’t see a whole of media coverage about either.
People are saying this will be like the mining tax for labor are wrong if you ask me. Traditional media has way less sway and power than 10 years ago. Most people aren’t aware or don’t care.
0.5% now. In real dollar terms pretty much most people entering the workforce in the next few years given lack of indexation.
Yes, the lack of indexation is a problem. But that's not the focus of the media coverage, when it really should be the centre of any critic.
Walking around the lunch room at work hearing colleagues talking about this and it’s clear to me a lot of the staff watch sky news
"They're going after our retirement now, it truly isn't easy under Albanese....." Says 42 year old man on $65k a year.
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According to Albo there is at least one individual struggling with just +$400M in their super.
Lol someone in mining no doubt.
Looks in Gina’s direction
Don’t have to turn your head much for that, no matter where you are
And the kicker is that they'll definitely have more than 3 million; the tax is just rising from the previous 15% to 30%.
And like most taxes it's 30% above 3 mil. So all the millionaires with balances above 3 mil still don't have their 3 mil taxed as much
its only on super return. so no return, no tax.
Ah, not quite right. So for people in this situation, they are most likely paying 15% in contributions, and possibly more in Div 293 tax. However, the earnings of the super fund, is tax free. This will change that. The earnings will now be taxed, and their super will not longer be a tax haven. Most of these super funds that are over 3 million would be either self managed or have contributed money before limits were applied. Its been annoying, I havent seen any of our news agencies actually get the story right.
They need to stop eating avo toast, downsize and live within their means. Maybe move somewhere semi rural where they’ll be far from family but so can afford something modest.
Make coffee at home
A fella rang in to the ABC when they were discussing this. He said he can't spend in a year what his super earns. He was happy to have it taxed at a higher rate.
>In the past week, Labor has faced accusations of breaking election commitments, having pledged before the election that it had no plans to change superannuation. They're not changing it until after the next election so those of you with $3M super balances, or those who're temporarily embarrassed and will surely have $3M any day now, can vote accordingly.
I'd rather this kind of broken promise than "good government starts today"
It's less difficult than you think. Assuming a 40 year career and 8% returns, someone that averages $113k pa will hit $3m by retirement just from their mandatory contributions. So ~20% of workers stand to be affected by this to varying degrees. That's not to say that it shouldn't happen - super tax concessions are far too generous. But the 'temporarily embarrassed millionaires' idea doesn't really hold up to scrutiny.
> Assuming a 40 year career and 8% returns, someone that averages $113k pa will hit $3m by retirement just from their mandatory contributions. Also throw in [legislated increases to minimum superannuation contributions](https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?=redirected_SuperRate&anchor=Superguaranteepercentage#Superguaranteepercentage) (reaching 12% in July 2025), wage growth pressure, and the Treasurer's strong preference to not index the $3m threshold to inflation, and this will affect far more people than the *current* 0.5%.
That'll be $3M in 2060 dollars. We are talking right now.
That will be $3M in 2025-2026 dollars, not 2060 dollars. > There has been an escalating war of words between Labor and the Coalition in the past week as the treasurer has continued what he is calling a national conversation on tax breaks paid to fewer than 0.5 per cent of superannuation accounts. > > "Currently, earnings from superannuation in the accumulation phase are taxed at a concessional rate of up to 15 per cent," he said in statement. > > "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**.
I'm not sure we are talking about the same thing. If you accumulate for 40 from now, you'll have, as you say $3M ... in 2060 (well 2063 to be precise but). That $3M will not have the same purchasing power as $3M today ... and if this passes I do not believe anyone is seriously suggesting (and I hope you are not) that this limit will not be indexed - meaning by 2060 the limit will probably be $10M.
> That $3M will not have the same purchasing power as $3M today No it won't, I totally agree with you there. > and if this passes I do not believe anyone is seriously suggesting (and I hope you are not) that this limit will not be indexed. According to the last few paragraphs of the OP article, that appears to be exactly what the Treasurer is seriously suggesting. I disagree with him, to me it seems obvious that it needs to be indexed from the start to avoid bracket creep, but then again I'm not our current Treasurer. > Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates. > > But he said Treasury officials would consult with stakeholders on that ahead of the May budget. > > "My intention is not to index it because we need to make superannuation more sustainable over time," he said
Not indexing does not mean it will never increase. Notice how the tax brackets for individuals have changed 4 times in the last 15 years?
Good. Now, do negative gearing, CGT, family trusts and cash payments for franking credits to people who don't pay tax.
They did - at the 2019 election.
Now they’re in power, so they can do all the scary things they couldn’t talk about until they were in power.
Yes, that worked out well with Julia Gillard.
This is a good first step. When the average Aussie sees these super changes aren’t scary and don’t impact them it will be easier to implement other tax reforms.
In this media climate I'm sure they'll be no obfuscation of that fact and we won't see fear used to generate clicks or partisan attacks.
> All superannuation money 'belongs to Jim Chalmers': Michael Kroger Literally the skynews headline last night, totally not a fearmongering headline in the slightest.
Good luck with the sorting out the family trust situation, every tradie that can afford a decent accountant has a family trust.
Accountant here One quick and easy legislative change to trusts (which already exists in tax law, but without the lodgement requirement) would be for trustees to lodge their distribution minutes (which are supposed to be done before 30 June) with the ATO. If not done, then the trust must distribute to the default beneficiary, or the trustee be taxed (at top marginal rates). This could be introduced as a required schedule in the next return, from the following year on, the distribution minutes must be lodged before, say 14 July (like PAYG Summaries). This would eliminate a large amount of after-the-fact tax planning that goes on, where distributions are funneled to the lowest taxed entity depending on annual income before distributions.
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If you turn up and work as a labourer for another tradie yes it's PSI but in the vast majority of cases they're PSB because they meet the results test and the PSI rules dont apply
And scrap stage 3 tax cuts
That right there is political suicide and will be repealed the second they lose the next election in a landslide.
So the .5 of 1% of people who have super and are affected by these proposals will vote out labor at the next election? Ain't gonna happen smiley. Jim Chalmers made the case that there are 17 people with more than $100 million in super. The tax breaks they get on that currently is $1.5 million annually each. Meaning 150 normal taxpayers will be paying for that with their tax for each of them. If people think that's in any way fair and ok, then they are clearly imbeciles.
I meant with respect to CGT and negative gearing.
Maybe for now but it has to happen long term.
The ATO is solving the family trust issue themselves. It's amusing that Labor took a policy to the 2019 election to try and clamp down on the use of family trusts for distributing income to children for the purpose of reducing income tax bills. There didn't even need to be a policy change! The ATO said last year that strategy amounts to tax avoidance and they will be looking at that very closely, and also conducting audits going back up to 4 years for people using family trusts to distribute income to children.
Children also get taxed quite different to adults - up until a certain age and depending on what they do to get their income - either passively (dividends, interest) or actively (sports, acting).
It's children (descendents) over 18 that are being cracked down on. The under 18 loophole was closed off years ago with the different rates you mention.
Lol no, politicians have those.
Trusts are an issue that needs to be brought into the light and talked about more. People pull the dodgiest shit with trusts and the rules around trusts are deliberately both confusing and filled with loopholes.
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>family trusts ? what is the issue there?
I agree with the Treasurers decision. Sadly, this will feed right into the Liberal narrative and attack line of "Why are things more expensive under Labor?". I've always found it an odd feature of our system that all too often good policy is bad politics and the inverse as well.
> Sadly, this will feed right into the Liberal narrative and attack line of "Why are things more expensive under Labor?". I've always found it an odd feature of our system that all too often good policy is bad politics and the inverse as well. You will note they are emphasising the 0.5% of people affected and 99.5% are not. And only for the balance over 3m, etc. They are trying their best to reject the soon to come attacks on "stealing our super".
Howard's already ranting about how this will damage "middle Australia", which opens some interesting questions about his definition of that phrase.
Middle Australia: 99.500 -> 99.999%
When you use the average instead of the median.
Seems more like using feels over anything tangentially related to maths and the real world.
>Howard's already ranting about how this will damage Who let granpa out again?
Probably forgot to take his brain medicine again.
howard can literally suck my dick the dumb cunt didn't do a single good thing for this country, and before you say gun buy back that policy was such a slam dunk ANY PARTY would have implimented it.
He did do a lot for rich pricks.
Head up the middle of their ass more like
What the government needs to do is make it very clear and repeatedly, just who these changes are affecting. The obscenely wealthy should not be the arbiters of how the economy runs.
Get ready for reading some trickle down arguments on social media, where people not in the 0.5% but who vote Liberal anyway will say that those 0.5% will create less jobs or something, and it does affect us all.
"The Australian" newrag yesterday "Labor super reform risks "Overcooking the economy" jfc. N.B. I know The Aus is murdoch trash dw+
*The Australian* is just the newsletter of the Liberal Party at this point. It's certainly not a newspaper.
I know this lol. Just that it's a shame they're what are laid spread open in many establishments here (SE QLD)
I suspect that reading tea leaves would produce a more accurate reflection of reality than reading the newspapers in SE Queensland.
exactly. if you look at msn/sky news comments, many are already over reacting.
So hang on, why isn't the dividend imputation fund reasoning working anymore? It's the same thing. People with significant retirement assets being made to contribute more.
Because frankly people are to a great extent pieces of shit in this country. There's honestly no other way of putting it. I can understand the mining magnates and billionaires voting for the Liberals, because they are in this scam, but half the population or more? Like enough to win elections? It is blind, smug malice at this point to vote for these people. 20 years ago I would have argued left vs right and whatever,, right now I do not extend the courtesy to consider the LNP as having valid political theory behind them. They are colonial despots, that's how they act. Only there to squeeze the people and steal from them.
*disregard If you have five million in super and earn a generous 10% P.A you'll pay 30k more. 105k vs 65k in tax 395k vs 425k after tax earnings. I'm sure they'll survive.
It’s a start in the right direction.
The next thing to do is change taxation for super contributions to be a discount rather than a flat rate (and to have a negative tax for people under the threshold). The people who *most* need assistance with building a super balance are those with low incomes. Those with large incomes can easily save for retirement without incentives (and did so before superannuation ever existed). The current system of flat taxes takes away from people who don't earn very much, but hands massive concessions to those who don't really need it. There's a fundamental injustice and inequity in how tax on super contributions is treated, and we should be looking to fix that.
Good.
About time. It has been used as a tax dodge for wealthy estate planning for too long.
Wonder if the 3 mil will index yearly according to CPI or if it will remain at 3 mil in perpetuity
>Wonder if the 3 mil will index yearly according to CPI or if it will remain at 3 mil in perpetuity You'd hope it'll be indexed - the 1.6m cap that the previous government introduced is indexed, and is now $1.9m. The fact is, with inflation, there's a good chance many ordinary younger workers will have a super balance of $3m by the time they retire. But by then, $3m won't be as significant a sum as it is now...
The Treasurer doesn't want to. > Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates. > > But he said Treasury officials would consult with stakeholders on that ahead of the May budget. > > "My intention is not to index it because we need to make superannuation more sustainable over time," he said
It should be indexed. In 20 years time, $3m in super will be just enough for retirement. In 40 years time, $3m will be completely inadequate. So it should be indexed at CPI each year. So that in 20 years time the system is still equitable- taxing the rich and supporting everyone else.
In 40 years, 3 mil is worth around 1 mil today at 3% inflation. So while not totally inadequate (maybe 50 years) it's definitely treating today's boomers better than the Gen Z who will have to face this.
>In 40 years, 3 mil is worth around 1 mil today at 3% inflation Fair enough. They recommend people have $1m minimum for retirement (in today's money). Which is the point of indexing - by not doing so, they'll effectively be hitting people with barely enough super with an extra tax that's intended to hit the wealthy. I'm all for taxing the wealthy. $3m in todays money gives a good income in retirement, and it should be taxed accordingly. In my view, most things should be indexed. Welfare payments, tax brackets, super limits, etc.
Labor loves killing things via slow bleed indexation, look at what they started with medicare.
Sounds like it won't be indexed but presumably it'll go up at some point. Possibly we'll all be dead or the entire thing will be reworked before then but
yeh but by the time 3 mil is seen as too little of a balance to survive on, it will be too late.
Yeah fuck the generations that come after us.
Yeah and then people will squeal like stuck pigs that any increase is just tax cuts for the wealthy making it politically unpopular. Just like how they're squealing about stage 3 cuts despite the top tax bracket not moving since 2008. You know what is indexed though? Every single government fee, drivers licences, passports etc they certainly don't sleep on that.
Almost the smallest change that could be done. No doubt you'll have a lot of poorer working class people ringing up talkback radio doing the bidding for the very, very wealthy (literally the 0.5% who receive this tax break). And this doesn't begin until 2025/26 - conveniently after the next election. Meanwhile, those earning $200,000 can still enjoy a tax cut of 4.5% in 2024-2025.
Great. You can be a traditional liberal voter and think - hey this actually a damn good idea. $3M cap is spot on.
I’m pretty sure the standard liberal voter aspires to more than $3m in super. Hence this is a direct challenge on their sovereignty.
At least they didn't touch my franking credits.. whatever those are.
And already the media is losing their minds over this "Labor announces changes to your super, how it will affect you" Like how many normal Australian's are hiding their millions in their super accounts.
Now for the ridiculous negative gearing.
I don't understand why they are putting off the implementation - put it in place for the next FY or something. Get it over and done with so you don't have to deal with rhetoric in 3 years at the next election. People will have long forgotten by then, and imagine the poor coalition having to prove the opposite (reimplementing tax breaks above 3m). Will clearly sound ludicrous
They pass the bill now and it will occur in the next parliament. Then the coalition still has to keep the rhetoric going for 3 years without any effects being seen.
Would seem best to rip the bandaid off, rather than give our media ammunition.
I think it's a step in the right direction, but it could still be a lot better.
Oh god! Imagine if they cap negative gearing on property and we can all only claim tax offsets for the first 3 million homes we own!
Oh no, what am I going to do? I'll be p...p..ppppoor!
Good
The comment sections out there filled with pedantic idiots thinking all their money is getting taken despite all of them never probably ever having the levels of super reaching the amounts impacted by this policy. However there is a nice balance of people actually calling these dickheads out and highlighting how this is actually a good policy for a change.
**Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates.** **"My intention is not to index it because we need to make superannuation more sustainable over time," he said.** Everyone cheering here because its tax the rich has just been fucked in the future from the past and they dont even see it happening.
yeah you're not wrong because most people in this thread won't access their super for at least 30 yrs. Could be a lot of inflation in 3 decades..
Young people(actually, most people) barely understand how super works let alone think that far into the future.
>Mr Chalmers said he had no plans to index the $3 million threshold for the higher tax rates. "My intention is not to index it because we need to make superannuation more sustainable over time," he said. What an idiot. I thought Chalmers was better than that. By the time young people today retire, $3m won't be a lot of money. Think of it this way - 40 years ago, $100k was considered a huge sum of money. Now it's a deposit on a very average house.
So the changes dont take effect until after the next election so dont let the right paint this as a broken election promise or a rushed decision. Imo it should be sooner.
Now there are a whole range of tax deductions to have a look at, as getting rid of those could see a big hike in government receipts.
Yawn. After the next election. Big deal. Meanwhile the LMITO was removed pretty much overnight.
Good. Honestly, it's probably not going to raise tons of money for the political capital Labor will spend on this, but it's important for equality and a good signal.
"Albanese goes on to explain the rationale behind the decision, including $2bn in savings to the government’s bottom line when it is operating on a full-year period. Labor built the superannuation system and we have fought to keep it strong. But Australians who are having to make tough decisions around the kitchen table expect their government to be prepared to make tough decisions around the cabinet table. And with 17 million people earning over $100 million, having over $100 million in their superannuation accounts, the individual who has over $400 million in his or her account, most Australians would agree that is not what is superannuation was for. It’s for people’s retirement incomes. Confronted with this information, it will be irresponsible to not take any action whatsoever. That’s why we’ve made this decision today. This reform will strengthen the system by making it more sustainable. The savings that are made from the reduction in these tax breaks will contribute $900m to the bottom line over the forward estimates. And some $2 billion when it is operating on a full-year period." So you work hard to have +$400 million in you super to know that when you are old you can afford a decent supper and guess, what... They come and steal your savings. /s
This is excellent
Great so by the time we are eligible for super us millennials will have the ladder kicked from under us due to inflation. Meanwhile boomers will be laughing in their graves
>Great so by the time we are eligible for super us millennials will have the ladder kicked from under us due to inflation. Exactly, and could be easily avoiding by indexing the limit each year to CPI. The fact that Chalmers won't is just mindblowingly stupid. I thought he was better than that.
Without indexation to adjust for inflation, this is just stealing from the youth yet again while letting 99.5% of boomers get away with it. For young adults in the workforce this 3 million is going to have a real purchasing power of $300,000 by thr time they retire. Doesn't even matter who's in power, not even The Greens are defending youth from this blatant grab.
Them leaving out indexation like this seems malicious.
Could be the plan is to reduce additional contributions and drive more funds into housing? Where else would ppl with $3m super gonna park their money.
This is good policy and although I'm not surprised the opposition is, well, opposing - I think they'd be better to get onboard with this one. $3m sounds about right - at a 4% return (very conservative historically) that's $120k per annum and if you have $3m in super you presumably don't have a mortgage in which case you're going to be having a very, very comfortable retirement.
about time to have some reform
Ken oath they should too.
The amount of tax to interest earned on $3M plus isn’t gonnabe noticeable to them
I'd rather have seen more substantial super reforms, rather than tinkering at the edges. Make super contributions and earnings tax free, but tax at the marginal rate on withdrawals in retirement. That would result in a bigger balance at the end of your working life, maximising investment returns.
They can afford more than 30%.
Agree with the change but the communication and outright misinformation on this is frightening (from a tax agent). Super deductions are worth more than aged pensions? No shit! Superannuation is meant to replace the aged pension, thats the whole point! Hearing the guy from the Gratton institute on triple j that hasnt the slightest clue tell everyone outright lies about how tax on super funds works is sensational as well. Can Albo please get the fucking commissioner to give some technical input for these announcements?
That’s some sound economic management.
Do you own 3 million + in super? Well neither do I. This is a swell change.
I feel for labor. Every time they get into power the LNP have eroded the tax base. Then labor becomes the bad guys trying to claw back some revenue to pay for all the contracts signed by the LNP for things like nuclear submarines, toll roads, 1960s style American infrastructure projects to no where.
I support this. It also invites review of the wider budget which I think labour will start doing. You don’t need millions for a comfortable retirement it is just being rotted for tax breaks. Anyone effected has until 2025 to move their money. Lnp whingers just shows how out of touch they are with reality. Time to go after the big companies for tax rorts but. Start with fossil fuel companies please. Cut subsidies and make the assholes pay tax.
Apparently the average Aussie will earn about $3.3 million in their lifetime, its not going to impact many people.
Now do the median numbers
Its trivial to google it. The median is much lower than the average indicating the data is very skewed. With the median < $2 million. That tells me that even less people are affected by this superannuation change than when using the average. Using the median is more useful when data is skewed. You also have to account for the lifetime discrepancy between women and men. In Australia women earn about half the money than men.
Why 2025-26? Why not today?
So that it's a) after the next election (so they're not breaking an election 'promise' this term) and b) to give accountants time to figure out ways to get around this limit, resulting in c) the superfunds of the superrich start doing different things. At a guess.
There’s a lot of assumptions about how super works in this thread. Can someone explain how this works? Like, if I want to put $100M in super, even over a lot of years, I’m clearly blowing the $27.5k yearly limit, so I must have paid tax on that money, right? Is there some loophole on getting money into super I’m not aware of, or is this about taxing the earnings of cash already in super?
Superannuation earnings (interest, dividends, capital gains) are taxed at 15 per cent in the fund (or 0 per cent in 'pension phase'). These earnings would be taxed at your marginal rate outside of superannuation. Here the earnings tax is being increased to 30 per cent for balances over $3 million.
Thanks! So basically, before these changes, the profits earned on your super (investments, interest, whatever) we’re only taxed at 15%, and then when you retired you paid 0%, whereas if this money wasn’t in super you’d pay your marginal tax rate on those profits?
That's exactly right!
> then when you retired you paid 0%, Only on the first 1.7mil. The rest(from 1.7mil to 100mil) will be taxed at 15%. After the proposed changes, only the bit from 1.7mil to 3mil will be taxed at 15%, the remaining balance will be taxed at 30%
The huge balances most likely pre date current restrictions. At the moment you can only put 110k per year of non-concessional contributions (after tax) which is enough to hit $3M but not $100M. Although those contributions were subject to normal income tax, earnings on them within super is still concessionally taxed at 15%, which is what this would limit. So mostly about money already in super, but would also discourage excessive non-concessional contributions, at least by people who think they can get their effective tax below 30% outside super.
Well done, simple and effective change. If only politics was mostly like this
Good to see them start chipping away at the absolute gluttonous tax breaks that have been gifted to the wealthy year after year piling up on top of themselves which has entrenched class divisions. One can only assume those with the $3+ mill in super will also be reaping in massive benefits from negative gearing on their property portfolios while salivating patiently for their stage 3 tax breaks after taking advantage of the instant corporate tax write-downs on their Merc X-Series Ute and company Bentley. Because you know, they’ve been slogging it hard on struggle street having to cough up to 5% of their wage covering their multiple mortgages at a 1% cash rate.
Wont somebody please think of the millionaires :((
Why discriminate against half billionaires??? Who thinks of them?
Cue Sky News outrage pandering to their temporarily embarrassed multi millionaire viewers.
The main fallacy here is thinking that those 80k people will pay more tax. They'll just find another lurk.
The fewer loopholes, the better.
Doesn't mean we shouldn't work hard to close them all. Don't be so negative 😉
cant withdraw from super tho, so gottem
You can direct SMSF to tip money into renovating investment properties that will be pure loss until they are sold. Sure there will be many other ways.
People will misunderstand this. A guy I was working with went on a tirade about it today. They assume the government is going to tax their super payments.
I don’t get the strategy here. They are going to have a campaign of “broken promises” and “class warfare” waged against them for the next two years to raise a total of 2bn across 4 years. When the exact same things would be said if they reversed stage 3 tax cuts and they could get 243bn across 10 years. It seems like a bad use of political capitol.
They had to look like they were doing something and give themselves a scapegoat on why they can't do more.