A prominent economist is urging Parliament to enact the federal government’s proposed tax reforms on superannuation, described as “essential changes.” The government aims to increase the tax on superannuation balances exceeding $3 million from 15% to 30%. Although set to take effect from July 1, this proposal has yet to become law.
Treasurer Jim Chalmers indicated that the changes would affect roughly 80,000 individuals, accounting for only 0.5% of super accounts in Australia. He emphasised that this adjustment does not limit future superannuation balances and only impacts earnings moving forward, clarifying that it is not retrospective in nature. The anticipated revenue from this reform is about $2 billion in its initial full year post-election.
Critics argue that the proposed tax increase disproportionately impacts super accounts, while Greg Jericho, chief economist at The Australia Institute, contends it would create a fairer superannuation system. He highlighted that the wealthiest 10% are projected to receive over $20 billion in taxation concessions, even as a significant portion of retirees live in poverty. The Institute also pointed out that some farmers and small business owners are using superannuation to shield assets from taxation.