Jim Chalmers unveils specific superannuation changes

Treasurer Jim Chalmers has revealed Australians with more than $3million in superannuation savings will no longer be able to pay an ultra-low concessional tax rate.

Australians can deposit up to $27,500 a year into their super and pay a low tax rate of just 15 per cent.

But from July 1, 2025, Labor wants those with more than $3million in their super to pay a higher tax rate of 30 per cent.

These 80,000 people are among the top 1 per cent of retirement savers. 

Prime Minister Anthony Albanese looks set to take that policy to an election in 2025, which would make him the first PM since John Howard in 1998 to fight a contentious re-election campaign on personal tax reform. 

The crackdown on 80,000 Australians with $3million in retirement savings would net the government $1billion in forgone revenue but the 15 per cent concessional tax rate costs the Budget more than $50billion every year.

The concessional rate is significantly lower than the 45 marginal income tax rate for those earning more than $180,000 a year, with that threshold rising to $200,000 from July 1, 2024 when the Stage Three tax cuts come into effect.

With gross government debt approaching $1trillion, Dr Chalmers and Assistant Treasurer Stephen Jones issued a joint statement arguing a crackdown on super was needed to fund items from defence to the National Disability Insurance Scheme.

‘Since coming to government, we’ve been upfront about the challenges facing the economy and the Budget,’ they said.

‘We inherited a trillion dollars of debt as well as growing spending pressures in defence, health, aged care and the NDIS.’

Two-thirds of superannuation tax concessions go to the top 20 per cent of income earners and less than 1 per cent of people have super savings of more than $3million, with that group having an average pool of $5.8million.

Dr Chalmers on Tuesday released the Tax Expenditures and Insights Statement outlining Labor’s proposals to wind back super tax concessions.