One of the most contentious elements, the plan to tax unrealised gains, has been discarded. Originally, this proposal would have levied taxes on financial gains that had not been realised through asset sales, impacting self-managed super funds with holdings like commercial properties and agricultural assets. Additionally, the threshold for super balances subject to higher taxes is now indexed for inflation.
Previously set to commence on July 1, 2025, the revised policy targets superannuation accounts exceeding $3 million, with its implementation now scheduled for a year later, on July 1, 2026. The changes mean earnings from realised gains, such as stock dividends or interest, will face an additional 15% tax for those with balances above the threshold, effectively raising the tax rate to 30% on these earnings.
The revision holds significant implications for various demographics in Australia. By indexing the $3 million threshold for inflation, Treasurer Chalmers offers relief to younger Australians who might otherwise face higher taxes as they approach retirement. This adjustment alleviates concerns among average-income workers initially worried about reaching the $3 million cap over time.
For self-managed super funds, which faced potential challenges under the previous proposal, the backtracking on taxing unrealised gains removes a considerable compliance burden. These funds were at risk of being disproportionately affected by taxes on assets not yet sold, a deviation from typical capital gains taxation practices.
As Chalmers moves forward with the revised superannuation policies, the focus shifts to navigating the political landscape, particularly as Labor aims to secure Senate approval where it lacks a majority. Ensuring legislative success is pivotal for the government’s broader tax reform agenda.
Economists and industry leaders have commented on the potential for the policy to affect different consumer segments. While the average worker may avoid the additional taxation due to increased thresholds, concerns around bracket creep persist. Superannuation balances often grow faster than inflation, potentially drawing more individuals into higher taxation categories over time.
Despite concessions, the government's ambition in tax planning remains subject to scrutiny, with stakeholders keenly watching for further developments. As Labor positions this revision as a step towards judicious reform, the clinching of political and public support remains a delicate interplay in Australia's evolving fiscal policy landscape.
