The government has proposed a new tax on superannuation balances over $3 million. Treasurer Jim Chalmers is showing no sign of backing down from this policy, which he says will make the superannuation system more sustainable and fairer. Under the new policy, individuals with superannuation balances exceeding $3 million will face additional tax obligations.
The tax is intended to target high-wealth individuals to help address budget deficits and ensure a more equitable distribution of tax burdens. However, the tax has sparked widespread discussion and debate. Critics argue that it could discourage savings and investment among high-income earners.
They also point out that the $3 million threshold is not indexed to inflation, meaning it could affect more people over time. One of the most controversial aspects of the policy is that it will tax unrealized gains on assets held in self-managed super funds, including businesses and farms.
Proposed tax targets high earners
This is a significant shift from traditional tax policy, where unrealized gains have not been taxed. Treasurer Chalmers has defended the policy, saying, “This policy is about ensuring that our tax system is balanced and fair. It’s essential that those who can afford to contribute more do so, to support the country’s economic health.”
The government plans to push the proposal through Parliament with the support of the Greens, who hold the balance of power in the Senate.
The legislation is expected to contribute $2 billion to the budget in 2025-26. However, there are still many questions about the policy that need to be answered. The government will need to provide more details on how the tax will work in practice and address concerns about its potential impact on the superannuation system as a whole.
As the debate continues, it is clear that the government will need to engage in powerful advocacy to build public trust and understanding of the policy. With many interest groups already pressuring the government to reconsider the proposal, the coming weeks and months will be crucial in determining its fate.
