Reduced super tax concessions proposed
Government announces plans for $3M super cap
The Prime Minister has announced that the government will look to reduce superannuation tax concessions for individuals with balances above $3 million from July 2025.
Whilst the announced policy will impact only a small fraction of superannuation members, the proposal will see the earnings on super balances over $3 million taxed at a concessional rate of 30 per cent, rather than the current rate of 15 per cent. The government argues that this reform is necessary to ensure the long-term sustainability of the superannuation system.
The Prime Minister defended the move, stating that the policy will only affect around 80,000 people and will not be implemented until 1 July 2025, beyond the current government’s term. He emphasised that the change will not be retrospective and will only impact future earnings. The move is estimated to contribute $900 million to the government’s bottom line over the forward estimates, and $2 billion in its first full year of operation.
The Prime Minister also stressed that this decision is necessary to ensure that the system remains fair and sustainable, especially given the country’s trillion-dollar debt.
Some have argued that the policy may discourage people from saving for their retirement and may discriminate against the self-managed superannuation fund sector, where the majority of affected members hold their entitlements. However, the government maintains that this reform is a responsible and necessary decision to ensure the future of the superannuation system.
The policy will be included in the upcoming Budget in May, with legislation to follow. Baumgartners will continue to monitor updates so watch this space. Read the full transcript here »
Author
Aaron Fitchett
Partner
Aaron is the Partner in Charge at Baumgartners. He specialises in complex tax matters, is a Chartered Tax Adviser with over 25 years’ experience advising private and corporate clients on a wide range of tax and commercial matters. Aaron also represents clients in disputes with the Australian Tax Office. Aaron holds a Master of Taxation from UNSW and is an active member of the Taxation Institute of Australia.
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