For decades, Australians have relied on the stability and predictability of the superannuation system.

Traditionally, Aussies only pay tax on their super's capital gains when selling an asset—meaning Aussies are being taxed on the profit they made, not on paper increases.

However, that could all change under Labor's latest proposal.

The Albanese government has been pushing a controversial new superannuation tax policy.

This change could have a significant impact on the nest eggs of many Australians, especially seniors and those with larger balances.

The government wants to introduce a 15 per cent tax on 'unrealised gains' for super balances above $3 million.

Seniors may have to keep an eye on their superannuation should the proposal push through. Image Credit: Pexels/Tima Miroshnichenko

With the proposal, Aussies with the said balance could be taxed on the increase in value of their super assets—even if they have not sold them and not pocketed any profit.

The change could be a radical departure from the way things worked and has raised eyebrows across the country.

After a sweeping election victory, Prime Minister Anthony Albanese and his team believed they had a strong mandate to implement the policies they campaigned for, including the new super tax.

Labor's national president, Wayne Swan, stated that the government now has 'a broad mandate for policies that it put before the people'.

Who will be affected?

The proposed tax change should target Australians with super balances above $3 million.

While it might sound a lot, it's not just the ultra-wealthy who the new rule could catch out.

Many self-managed super fund (SMSF) members, small business owners, and retirees who have worked hard to build up their savings could find themselves over the threshold.

With the tax being on 'unrealised' gains, Aussies who met the said criteria could be forced to pay tax on increases in value despite not selling anything.

Some experts warned that this change could force retirees to sell assets just to pay the tax bill.

Is this normal?

The idea floated in the United States, but it was quickly dropped.

In Australia, the proposal has already faced resistance from crossbench senators and independents.

What are the critics saying?

Swan, also the current Chairman of Cbus Super, has been careful not to defend the policy directly.

Meanwhile, independent senators like David Pocock also raised concerns about the fairness and practicality of taxing unrealised gains.

The Greens, for their part, want the threshold lowered even further to $2 million.

Wilson Asset Management's Founder, Geoff Wilson, warned shareholders about the tax plan and how it could affect small business investment in the country.


'If you want to destroy innovation, if you want to destroy entrepreneurialism—what is Australia all about? It's about giving people a chance to have a go, and this is what it's destroying,' Mr Wilson said in an interview.

'I was talking to someone that works in a technology hub recently and he said 50-60 per cent of the money that comes into those small technology companies comes from our self-managed super funds.'

Prime Minister Albanese addressed several questions about the said proposal in an interview. Watch here:

Source: Sky News Australia/YouTube​

'So even though Mr Albanese is correct in terms of the tax only affects a very small number of people in terms of paying extra tax, it actually affects every Australian in terms (of the fact) the $4.2 trillion is now going to be not going to be productively invested,' Mr Wilson added.

Seniors with a super balance under $3 million won't be directly affected by the new tax, at least for now.

However, with inflation and rising asset values, more and more Australians could be over the threshold in the coming years.

If you have a self-managed super fund, own property in your super, or are planning your retirement strategy, it's more important than ever to stay informed and seek professional advice.

Whether you're directly affected or not, it's a reminder that the rules around retirement savings could change, sometimes quickly and dramatically.

Key Takeaways

• The Albanese Labor government proposed a new superannuation tax.
• Labor wants to tax unrealised gains on superannuation balances above $3 million.
• The policy could force some with self-managed super funds to sell assets in order to pay the tax.
• Critics from wealth management firms believed that the proposal could be detrimental to Australians in the long run.

Are you worried about the new super tax? Do you think it's fair, or do you see it as a raid on your hard-earned savings? Have you made changes to your retirement plans before because of government policies? Share your thoughts and experiences in the comments below.

 

[Suzanne rose]

How many people actually have $3 million in their super accounts.
I was only reading the other day the average Super when retiring is $400,000

In Australia, the average superannuation balance for those aged 60-64 is approximately $361,539, with a median of $183,524. For those aged 65-69, the average is around $428,738 and the median is $207,540. These figures vary based on gender, with men generally having higher balances than women.

As of June 2021, about 2.5% of Australians, or 417,567 individuals, had a superannuation balance exceeding $1 million. This represents a 29% increase from the 322,200 individuals who held over $1 million in June 2019, according to ASFA.

 

[Giannidifirenze]

Albo was given a ‘broad mandate’ to make changes across the spectrum of Labor planks.
Welcome to Country.

 

[Rain72]

How many people actually have $3 million in their super accounts.
I was only reading the other day the average Super when retiring is $400,000

In Australia, the average superannuation balance for those aged 60-64 is approximately $361,539, with a median of $183,524. For those aged 65-69, the average is around $428,738 and the median is $207,540. These figures vary based on gender, with men generally having higher balances than women.

As of June 2021, about 2.5% of Australians, or 417,567 individuals, had a superannuation balance exceeding $1 million. This represents a 29% increase from the 322,200 individuals who held over $1 million in June 2019, according to ASFA.

I don't think the number of people with $3 million in their account is the issue - nor the question we should be asking. There is no indexation in the proposal. That means that over time - and possibly fairly quickly - the number of affected people will grow. But it's worse than that. Not only does this put investment in Australian innovation at huge risk, it also sets a very dangerous precedent.

A few years back, Shorten tried to abolish franking credits. There was a great cry out from Labor supporters that it only impacted the 'wealthy' and people who didn't pay tax shouldn't get credits. That sounded good in theory, but what people failed to consider was that it would mean an end to Australian companies being strongly favoured for investment. Vast numbers of investors would move their investments off shore because their returns were cut.

Shorten had to back track to avoid hurting pensioners, but he ignored the fact that lots of other folk temporarily on very low incomes and not paying tax pay tax have acquired a few dividend-paying shares one way or another. Specifically, those retirees just over the asset threshold would drain their savings quickly and move onto the aged pension, thus costing the country far more than their small franking credit refund.

I have been vocal in the past in objecting to massive tax concessions on large superannuation balances. Super was devised as a tax dodge for the rich, and that is wrong. It should not be used that way. But is simply ludicrous to suggest that anyone should be taxed on money they don't have and can't acquire. And what about unrealised losses? The value of an investment (especially in stocks or managed funds) can go up one year and back down the next. But the investor is taxed on money they don't have in the good year, then gets nothing back in the bad year. So they are effectively taxed on earnings they never made. It's crazy, and it's dangerous. Which is why America backed off it very quickly.

 

[Greg350]

How many people actually have $3 million in their super accounts.
I was only reading the other day the average Super when retiring is $400,000

In Australia, the average superannuation balance for those aged 60-64 is approximately $361,539, with a median of $183,524. For those aged 65-69, the average is around $428,738 and the median is $207,540. These figures vary based on gender, with men generally having higher balances than women.

As of June 2021, about 2.5% of Australians, or 417,567 individuals, had a superannuation balance exceeding $1 million. This represents a 29% increase from the 322,200 individuals who held over $1 million in June 2019, according to ASFA.

Estimated to be 80,000 people with balances over $3m.

Many of them "hide" their money in super where the taxation is more favourable, hence the reason the government is going after them to recoup tax that would have been paid outside super.

Super was set up to provide for your retirement, not to boast the wealth of people well beyond what's needed to live a comfortable lifestyle.

 

[NannaKay]

Well those who voted Labor should be thanked for this egregious attack on retirement savings. And it won’t stop at super, nor at $3M! A disaster for small businesses, farmers and self-funded retirees! It seems voters were sucked in by Labor’s scare campaign and personal attack on Peter Dutton. Very sad!

 

[NannaKay]

Estimated to be 80,000 people with balances over $3m.

Many of them "hide" their money in super where the taxation is more favourable, hence the reason the government is going after them to recoup tax that would have been paid outside super.

Super was set up to provide for your retirement, not to boast the wealth of people well beyond what's needed to live a comfortable lifestyle.

But this is just the beginning! No indexation of the upper limit, and it may flow through to other items like investment properties, share portfolios, even the family home!

 

[Suzanne rose]

Well those who voted Labor should be thanked for this egregious attack on retirement savings. And it won’t stop at super, nor at $3M! A disaster for small businesses, farmers and self-funded retirees! It seems voters were sucked in by Labor’s scare campaign and personal attack on Peter Dutton. Very sad!

It's not an attack on Super only Super over $3 million

You really would not have wanted Dutton as our Prime Minister. He would have ruined our medical system making it like America's

 

[Greg350]

Well those who voted Labor should be thanked for this egregious attack on retirement savings. And it won’t stop at super, nor at $3M! A disaster for small businesses, farmers and self-funded retirees! It seems voters were sucked in by Labor’s scare campaign and personal attack on Peter Dutton. Very sad!

Retirement savings??? No, savings hiden away to reduce tax payable. So I guess you either have over $3m in super or like paying more than your share of tax, as others have to make up the shortfall.

 

[Giannidifirenze]

It's not an attack on Super only Super over $3 million

You really would not have wanted Dutton as our Prime Minister. He would have ruined our medical system making it like America's

Yes that’s the next generation and generations of workers after, who will be paying that tax as wages and super increase.
Agree that the Liberal/National Party have let the Australian people down in not having well informed policies and not being prepared as a worthwhile contender.

 

[Vespa Girl]

I don't think the number of people with $3 million in their account is the issue - nor the question we should be asking. There is no indexation in the proposal. That means that over time - and possibly fairly quickly - the number of affected people will grow. But it's worse than that. Not only does this put investment in Australian innovation at huge risk, it also sets a very dangerous precedent.

A few years back, Shorten tried to abolish franking credits. There was a great cry out from Labor supporters that it only impacted the 'wealthy' and people who didn't pay tax shouldn't get credits. That sounded good in theory, but what people failed to consider was that it would mean an end to Australian companies being strongly favoured for investment. Vast numbers of investors would move their investments off shore because their returns were cut.

Shorten had to back track to avoid hurting pensioners, but he ignored the fact that lots of other folk temporarily on very low incomes and not paying tax pay tax have acquired a few dividend-paying shares one way or another. Specifically, those retirees just over the asset threshold would drain their savings quickly and move onto the aged pension, thus costing the country far more than their small franking credit refund.

I have been vocal in the past in objecting to massive tax concessions on large superannuation balances. Super was devised as a tax dodge for the rich, and that is wrong. It should not be used that way. But is simply ludicrous to suggest that anyone should be taxed on money they don't have and can't acquire. And what about unrealised losses? The value of an investment (especially in stocks or managed funds) can go up one year and back down the next. But the investor is taxed on money they don't have in the good year, then gets nothing back in the bad year. So they are effectively taxed on earnings they never made. It's crazy, and it's dangerous. Which is why America backed off it very quickly.

A very well written article. I agree with you. It is not the amount that is in our Super Funds that is the real issue. It is the total principle of what they intend to do. Once in, it could affect everyone's Super Funds as they change the limits at their whim.

 

[NannaKay]

It's not an attack on Super only Super over $3 million

You really would not have wanted Dutton as our Prime Minister. He would have ruined our medical system making it like America's

Sadly you have swallowed Labor’s lies about Dutton. He pledged extra support for Medicare and more local health centres than Labor. Bulk billing was also much higher under Morrison than now under Labor. Remember, it was Gillard who froze the GP rebate in the first place.

 

[NannaKay]

A very well written article. I agree with you. It is not the amount that is in our Super Funds that is the real issue. It is the total principle of what they intend to do. Once in, it could affect everyone's Super Funds as they change the limits at their whim.

Spot on! It is the outrageous principle that is the real danger! Rejected by other countries.

 

[Bill MacL]

I didn't vote for this prick. He personally employs over 60 people to tell him what to do, that alone, tells me he knows F==k all about his job. He's just trying to steal our money to pay for his stupid mistakes anyway he can. Politicians remind me of a litter of piglets sucking on the teat of Australia's wealth.

 

[DJRayner]

It's not an attack on Super only Super over $3 million

You really would not have wanted Dutton as our Prime Minister. He would have ruined our medical system making it like America's

What a load of BS,where did Dutton say that or anything like it. It was just another Labor lie, and seems like the vast majority of Australians fell for it, hook, line and sinker. We're all going to pay the price for voting these fools in.

 

[Giannidifirenze]

The Labor Government has 3 ‘Rivers of Gold’ with which they can play: GST, Medicare Levy, Superannuation in redistributing the wealth to poorer minorities.

 

[Vespa Girl]

What a load of BS,where did Dutton say that or anything like it. It was just another Labor lie, and seems like the vast majority of Australians fell for it, hook, line and sinker. We're all going to pay the price for voting these fools in.

Did we vote them in? The electorate that I am in, which is Boothby had been Liberal for a number of years. In the last election Labor won this seat. I always believed that something was gravely amiss when it went to Labor. Now this election, Sturt which was held by Liberal for 53 years has also been lost. The results were called before Western Australian voting had even closed. Methinks something is rotten in this state.

 

[Greg350]

But this is just the beginning! No indexation of the upper limit, and it may flow through to other items like investment properties, share portfolios, even the family home!

There is no detail in the proposal either, you are making assumptions. Why make up crap, does it make you feel better. You sound like a conspiracy theorist.

 

[Greg350]

Did we vote them in? The electorate that I am in, which is Boothby had been Liberal for a number of years. In the last election Labor won this seat. I always believed that something was gravely amiss when it went to Labor. Now this election, Sturt which was held by Liberal for 53 years has also been lost. The results were called before Western Australian voting had even closed. Methinks something is rotten in this state.

You clearly have no idea about how voting and the count works, so you follow the conspiracy nutjobs who say the election was rigged. What nonsense. They called the winner early, in your mind, because of the way the voting was going. When there's a large move in one direction with the early counting you are not going to suddenly see a massive swing the other way to offset the early swing and than make the other side ahead by a large amount. That's not how counting works, no doubt though you'll keep the stupid conspiracy thinking going. Strange how the Libs haven't said a thing about that, why, because they know the count was right and they knew BEFORE the election where they stood. Guess what, not everything is released for public information before an election.

 

[Jefron]

A dozen hells would need to freeze over, before I would ever think of voting for "no personality Dutton" and his nuclear garbage.
Albanese, in my eyes, is the better of the two demons. Also, with Dutton thinking he can make our health system like the US, Dutton committed political suicide. If he was too stupid to see that, he's definitely too stupid to lead a country. He had no hope and I was never worried he would ever be Prime Minister. What a fool.
I have way less than $100,000 in super and I'm on DSP, so I don't think the super changes will EVER affect me.