Huge superannuation announcement from federal treasurer—could you be $15,000 better off?

After years of debate and mounting pressure, Treasurer Jim Chalmers has stunned Australians with a dramatic reversal on his superannuation tax proposal.

The plan, once set to tax unrealised capital gains, has been scrapped entirely, surprising both critics and supporters alike.

While high-balance superannuation accounts will still face higher taxes, the real winners could be the country’s lowest-paid workers.

Chalmers unveils six superannuation changes

In a surprise press conference on Monday, Treasurer Jim Chalmers unveiled six superannuation changes approved by cabinet just hours earlier.

The most controversial element—taxing unrealised capital gains—has been removed following widespread opposition from industry groups, farmers, and economists.

Former Prime Minister Paul Keating, the architect of Australia’s compulsory superannuation system, publicly supported the reversal, adding political weight to the decision.

Revised tax rates and thresholds

Under the revised plan, a second tier of super concessions will apply, introducing a 40 per cent tax rate on balances above $10 million while maintaining a 30 per cent rate for balances above $3 million.

Both thresholds will now be indexed to inflation, addressing concerns about bracket creep and ensuring retirees are not unfairly caught by the thresholds over time.

The new rules, set to take effect in July 2026, aim to balance fairness with revenue needs while providing certainty for future retirees.

LISTO changes to benefit low-income earners

While high-balance accounts remain under scrutiny, the changes to the Low Income Superannuation Tax Offset (LISTO) could benefit far more Australians.

From 1 July 2027, LISTO payments will rise from $500 to $810, and the eligibility threshold will increase from $37,000 to $45,000, helping 1.3 million Australians—60 per cent of whom are women—achieve a more secure retirement.

For part-time workers and those in essential roles, this could mean an extra $15,000 at retirement, particularly benefiting seniors who continue working and women with interrupted careers due to caring responsibilities.

Why the unrealised gains tax was scrapped

The initial plan to tax unrealised gains sparked uproar because it targeted paper profits on assets such as farms, family businesses, and property held in self-managed super funds.

Farmers and retirees often hold high-value assets without corresponding liquid cash, making the proposed tax particularly unfair and potentially threatening generational enterprises.

Kassabgi highlighted the significance of the reversal, noting that venture funds with portfolios heavily supported by self-managed super could have been stifled under the original proposal.

Paul Keating’s endorsement played a crucial role, lending authority and reassurance to the public about the stability of Australia’s superannuation system.

Keating criticised past changes made during the Howard government as a 'rampage' needing correction, emphasising the importance of a fair and reliable system.

These changes restore confidence for retirees and those approaching retirement, offering certainty through indexation and protection against bracket creep.

Political reactions and public impact

Political reactions remain mixed.

Greens economics spokesman Nick McKim welcomed LISTO increases but argued that Labor had 'further weakened' its proposal by scrapping the unrealised gains tax and keeping the $3 million threshold.

Superannuation Lead Richard Webb said the revisions followed months of campaigning and urged Parliament to legislate the changes.

The Opposition described the backflip as 'humiliating' but approved the removal of the unrealised gains tax, highlighting the political compromise underlying the changes.

For most Australians, especially those on lower incomes, the reforms represent a genuine win that could significantly enhance retirement savings.

If you’re looking to uncover extra value in your retirement fund, there are ways to find money you might not even know exists.

One practical example shows how reviewing your super statements can reveal hidden boosts that could significantly increase your savings over time.

It’s a useful follow-up to understand how small actions now can pay off in the long run.

Read more: Super statements reveal hidden boosts to retirement savings

Do these superannuation changes strike the right balance between fairness and revenue raising?