Changes To Superannuation Tax Rates Are On The Way

Treasurer Jim Chalmers recently announced plans to double the tax rate on superannuation balances over $3m from 15 to 30 per cent, but the plans are under fire for just how much they’ll affect those who’ve worked hard for it. As it turns out that could be around 500,000 Australians who’ll be paying tax on their super at 30% when the legislation kicks in during 2025.

According to Prime Minister Anthony Albanese this change will impact approximately 80,000 people. However, the Financial ServicesCouncil (FSC) has found that six times as many Australians could be affected, estimating that about 500,000 people could be impacted in the long-term when younger generations retire. The FSC stated that the $3 million cap is not indexed to inflation, which means that a 30-year-old will have a real cap of around $1 million in today's dollars, raising questions about intergenerational fairness.

As it stands today, the superannuation tax concessions cost the government around $50 billion per year, and Albanese claims that this reform will make the country's $3.3 trillion super system more sustainable.However, Shadow Treasurer Angus Taylor argued that superannuation isAustralians' money and should be left alone, especially as many Australians are struggling to make ends meet with rising interest rates.

What happens in 2025 when this kicks in? 

It’s bitter-sweet that the change will not be retrospective, rather, it will apply to future earnings and come into effect after the next election.

In 2023, the average superannuation balance is approximately$150,000, and the number of Australians with over $3 million in their super, all the way up to $400 million, is minimal, according to Treasurer Jim Chalmers but again, this is arguable…

Overall, the change to superannuation tax concessions will affect a relatively small number of Australians in the short term, but it could have broader implications in the long term, especially as younger generations retire. Regardless, the government has argued that it is necessary to make the super system more sustainable, given the significant cost of superannuation tax concessions.

If you’d like to discuss your superannuation in it’s current state and how you might be looking as this change comes into affect, reach out to the Attune team for strategic, tailored advice to help you set your retirement up the way you want it. Call the team on 1300 866 113 or send us an email to start the conversation – don’t wait until it’s time to put the tools down.

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