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.

 

[Aussie all the Way]

a person after my own heart. clear and precise, but alas, it is now shown that there are more idiots in this country.

Thanks, I thought there were still enough of us around after our massive $3.50 p/f rise in Pension to get rid of them, but no.

 

[Gail Artley]

he can't help himself, take,and take again.

What rubbish! Think of some of the things 'he' did. Scripts now 2 months supply for the price of 1. HECS fees reduced by 20%. Childcare expanded. Medicare to be extended. The greed of 'fortunate' people, with over $3 million in Super. They will only have to pay 15% on wealth above that amount. Who really needs more than $3 million?

 

[novezar]

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!

Hi NannaKay,
To top up your posting, I made postings well before the elections took place of what to expect from a Labor government being re-elected.

It's all coming to FRUITION.

This was especially to do with super accounts plus others as well.

As you suggest, I can quite clearly see , where it will all more than likely could be spread into other areas of investments.

I warned all & sundry of anything to do with Labor & the Greens that there will be ALL HELL TO PLAY & PAY with them.

Very, very unfortunately, the majority general voting public couldn't see through Albo's & Chalmers ABSOLUTE LIES which they knew how to capitalise on, & , fell for it all. Completely SUCKED IN.

The majority fell for those lies left, right & centre. A pretty dopey lot of voters, if you ask me.

Now, everyone will pay handsomely for their, the voters, sheer lack of common sense. This is also for Labor's ABSOLUTE GROSS STUPIDITY.

We, self included, hopefully won't be affected with our GENERALLY small super schemes where the majority are up to about $500k's.

I must admit, my supplementary super balance is well, well under this amount by miles.

I'm very worried indeed what is going to happen. Many millions of others should be as well.

Basically, we are DOOMED to the FAILURES of this complete mob of RATBAGS WHO ARE GOING TO RULE VIRTUALLY UNCHECKED.

 

[Squizzy1]

Wait for the blackouts and price rises, talk to us in a year, nuclear in this day and age is much cheaper and far more reliable than costly short term wind and solar. Why do you think we import so much food now, because we are running out of productive farm land, 100's of thousands of acres gone to wind and bloody heat generating solar panels. Have a look around the world and think about what is generating all the temp. change, heat dispensing solar panels...you voted labor we are all going to pay the price now.

I have rooftop solar and not a bill in over a decade, while U keep waiting for free nuclear power we don't even refine the fuel needed.

 

[novezar]

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.

Well, Jefron, it looks as though you ABSOLUTELY fell head over heels believing Albo's complete pack of lies.

You are definitely barking up the wrong tree with your unintelligent comment.

Don't worry champ, you will come a GUTSA with the rest of us. Just hope you don't go hungry in the future & that you aren't in the renting cycle.

 

[Squizzy1]

Hi NannaKay,
To top up your posting, I made postings well before the elections took place of what to expect from a Labor government being re-elected.

It's all coming to FRUITION.

This was especially to do with super accounts plus others as well.

As you suggest, I can quite clearly see , where it will all more than likely could be spread into other areas of investments.

I warned all & sundry of anything to do with Labor & the Greens that there will be ALL HELL TO PLAY & PAY with them.

Very, very unfortunately, the majority general voting public couldn't see through Albo's & Chalmers ABSOLUTE LIES which they knew how to capitalise on, & , fell for it all. Completely SUCKED IN.

The majority fell for those lies left, right & centre. A pretty dopey lot of voters, if you ask me.

Now, everyone will pay handsomely for their, the voters, sheer lack of common sense. This is also for Labor's ABSOLUTE GROSS STUPIDITY.

We, self included, hopefully won't be affected with our GENERALLY small super schemes where the majority are up to about $500k's.

I must admit, my supplementary super balance is well, well under this amount by miles.

I'm very worried indeed what is going to happen. Many millions of others should be as well.

Basically, we are DOOMED to the FAILURES of this complete mob of RATBAGS WHO ARE GOING TO RULE VIRTUALLY UNCHECKED.

Is it any wonder the electorate are turning to the ALP with all this doomsday divisive abuse from the right, will they ever learn?

 

[Squizzy1]

Wait for the blackouts and price rises, talk to us in a year, nuclear in this day and age is much cheaper and far more reliable than costly short term wind and solar. Why do you think we import so much food now, because we are running out of productive farm land, 100's of thousands of acres gone to wind and bloody heat generating solar panels. Have a look around the world and think about what is generating all the temp. change, heat dispensing solar panels...you voted labor we are all going to pay the price now.

Heat generating solar panels, where do they get the heat from, careful with those solar powered Xmas lights, etc. Guess Nuclear plants have those cooling towers just for aesthetics.

 

[Squizzy1]

Not unless Ur Super exceeds $3m, and those with more can spread their investments elsewhere.

 

[Sherril54]

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.

ABSOLUTELY, AND HOW ABOUT EVERYONE WAIT TO SEE IF THIS ACTUALLY COMES TO PASS.

 

[Sherril54]

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.

There were a lot of people who were fooled then, they did not trust the man And with good reason!

 

[Sherril54]

you are very nasty.

That`s like calling the kettle black, you always have your say and do not like comments which disagree with your position and if they do you don`t hold back. .

 

[Sherril54]

Thanks, I thought there were still enough of us around after our massive $3.50 p/f rise in Pension to get rid of them, but no.

Democracy for you! Thank the Lord!

 

[novezar]

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.

Hi Greg350,
It looks as though you live in W.A. I must say that I really feel real bad for all W.A. residents. I reckon that you are all in for a real crook hell of a ride.

Your sheep industry if not already, will be virtually completely destroyed with the live sheep export trade finished. What about your North West Shelf gas mining. I reckon that, that will be on the back burner for years to come. Boy oh boy, what a loss of income for both industries, & for the government.

How many other business strategies will be lost, especially in the mining sector over in your great state.

I reckon the Iron Ore mining may also become affected as well.

 

[Bullwinkle]

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.

You vote for a political party not the a person…!!!

 

[Sherril54]

Hi Greg350,
It looks as though you live in W.A. I must say that I really feel real bad for all W.A. residents. I reckon that you are all in for a real crook hell of a ride.

Your sheep industry if not already, will be virtually completely destroyed with the live sheep export trade finished. What about your North West Shelf gas mining. I reckon that, that will be on the back burner for years to come. Boy oh boy, what a loss of income for both industries, & for the government.

How many other business strategies will be lost, especially in the mining sector over in your great state.

I reckon the Iron Ore mining may also become affected as well.

You are nothing but doom and gloom

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.

I have a friend who is a staunch Labor supporter and has quite a large sum invested in Super. His attitude towards Shorten`s Franking proposal was he was prepared to loose assests rather that risk the LIB/NAT at control of the economy.

 

[Aussie all the Way]

I notice we are told about this after the election. Taxpayers have already paid tax on the wages that is in Super before Salary Sacrifice was introduced. The party in Power always hits us with tax afterwards.

You were told about it according to them, it was lost with all the money they were trowing around, which is what they wanted and all the idiots who voted them back in fell for it.

 

[Suzanne rose]

you are very nasty.

How is this nasty , you are the nasty one!

 

[Sherril54]

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.

Oh FGS!

 

[Suzanne rose]

you would believe there are fairies in the garden. and when did dutton say he would ruin medicare it did not come out of his mouth.??? it was the liar albo who would not let go of that one, and many others. you will never ever know how Peter would done as a PM. At least he can retire with dignity, honesty and a true gentleman. albo will never attain those attributes.

I saw the interview with him stating it !! I think you are off with the

 

[Aussie all the Way]

There were a lot of people who were fooled then, they did not trust the man And with good reason!

Yep a lot of idiots fell for the garbage that spewed out of the Labor campaign, and we are all going to pay now. Dutton is only the leader the policies are what you vote for DER