Is YOUR retirement at risk? What wealthy Aussies are asking about Albanese's new super tax laws
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When it comes to superannuation, most of us are just hoping we’ll have enough to enjoy a comfortable retirement—maybe a few holidays, a nice meal out, and the ability to spoil the grandkids. But for a select few, the numbers are eye-watering, and the latest changes to super tax laws have sparked a heated debate that’s got the whole country talking.
Recently, a wealthy retiree—let’s call him 'Mr. $8 Million'—set the internet alight after asking a financial columnist how he could avoid paying extra tax on his enormous superannuation balance. With a self-managed super fund (SMSF) worth a staggering $8 million, shared with his wife, he wanted to know if there was a way to sidestep the Albanese government’s proposed super tax hike.
What’s the new super tax all about?
Under Labour’s plan, Australians with more than $3 million in super will pay an additional 15 per cent tax on the portion of their earnings above that threshold. The government says this will only affect about 80,000 people—roughly 0.5 per cent of the population. For context, the average Aussie man has a super balance of $182,000, and the average woman has $146,000. So, for most of us, this is a world away from our reality.
But that hasn’t stopped the country’s wealthiest from seeking advice on how to protect their nest eggs. Mr. $8 Million, in his mid-to-late 80s, explained that he and his wife split their SMSF 58 per cent to him and 42 per cent to her. They plan to draw the minimum pension (9 per cent) in the 2025/26 financial year, which comes to about $333,000.
His burning question: If they sold enough assets to bring their balance below $6 million by June 30 next year, would they dodge the new tax? The answer, according to financial expert Noel Whittaker, is 'it depends.' The tax is calculated per member, so if one person’s account is still above $3 million, that account is liable for the extra tax.
To put it in perspective, if Mr. $8 Million reduced his personal super to $3 million and earned $400,000 in the next financial year, the extra tax would cost him just $7,056. Not exactly a drop in the ocean, but certainly not a life-ruining sum for someone with millions in the bank.
Public reaction: Sympathy in short supply
Unsurprisingly, the public response was less than sympathetic. Many readers pointed out that superannuation was never intended as a tax-free inheritance vehicle for the ultra-wealthy. Comments ranged from '$8 million and they’re whingeing about paying just a little extra tax' to 'Super is not an inheritance vehicle to ensure wealth is passed down the generations whilst paying the least amount of tax.'
It’s a sentiment that resonates with many everyday Australians, especially when you consider that 97 per cent of us will never see a $3 million super balance, let alone $8 million.
But is there more to the story?
While most agree that those with millions in super can afford to pay a bit more, there are some concerns about the details of the new tax. One key issue is that the $3 million threshold isn’t indexed to inflation. That means, over time, more and more Australians could find themselves caught by the tax, even if they’re not what we’d consider 'super rich' today.
Economists estimate that by 2040, $3 million could be worth just $2 million in today’s money. AMP economist Diana Mousina has warned that even average earners could eventually be affected if the threshold isn’t adjusted. She points out that a 22-year-old starting work today and earning average wages for life could eventually hit the $3 million mark.
What does this mean for you?
For now, the vast majority of Australians won’t be affected by the new tax. But it’s a reminder to keep an eye on changes to superannuation rules, especially as governments look for ways to balance the budget and fund essential services.
If you’re lucky enough to have a super balance approaching the $3 million mark (or you’re just curious about how the rules work), it’s worth speaking to a financial adviser. And if you’re like most of us, it’s still a good idea to review your super regularly, make sure your investments are working for you, and check that your fund’s fees aren’t eating away at your hard-earned savings.
The bigger picture: Superannuation and fairness
At its heart, the super tax debate is about fairness. Should those with the most pay a little more to help fund services for everyone? Or is it unfair to change the rules for people who’ve worked hard and saved diligently? There are no easy answers, but it’s a conversation worth having—especially as Australia’s population ages and the cost of healthcare and pensions continues to rise.
What do you think about the new super tax? Is it fair for the wealthiest to pay more, or are you worried about the threshold not keeping up with inflation? Have you had to navigate changes to your own super, or do you have tips for making the most of your retirement savings? Share your thoughts in the comments below.
Read more: ‘It’s not cause for alarm’: Financial expert leaves advice ahead of superannuation changes
Recently, a wealthy retiree—let’s call him 'Mr. $8 Million'—set the internet alight after asking a financial columnist how he could avoid paying extra tax on his enormous superannuation balance. With a self-managed super fund (SMSF) worth a staggering $8 million, shared with his wife, he wanted to know if there was a way to sidestep the Albanese government’s proposed super tax hike.
What’s the new super tax all about?
Outrage was sparked after a wealthy retiree with an $8 million super fund publicly asked how to avoid the proposed super tax targeting balances over $3 million. Credit: Nattakorn / iStock
Under Labour’s plan, Australians with more than $3 million in super will pay an additional 15 per cent tax on the portion of their earnings above that threshold. The government says this will only affect about 80,000 people—roughly 0.5 per cent of the population. For context, the average Aussie man has a super balance of $182,000, and the average woman has $146,000. So, for most of us, this is a world away from our reality.
But that hasn’t stopped the country’s wealthiest from seeking advice on how to protect their nest eggs. Mr. $8 Million, in his mid-to-late 80s, explained that he and his wife split their SMSF 58 per cent to him and 42 per cent to her. They plan to draw the minimum pension (9 per cent) in the 2025/26 financial year, which comes to about $333,000.
His burning question: If they sold enough assets to bring their balance below $6 million by June 30 next year, would they dodge the new tax? The answer, according to financial expert Noel Whittaker, is 'it depends.' The tax is calculated per member, so if one person’s account is still above $3 million, that account is liable for the extra tax.
To put it in perspective, if Mr. $8 Million reduced his personal super to $3 million and earned $400,000 in the next financial year, the extra tax would cost him just $7,056. Not exactly a drop in the ocean, but certainly not a life-ruining sum for someone with millions in the bank.
Public reaction: Sympathy in short supply
Unsurprisingly, the public response was less than sympathetic. Many readers pointed out that superannuation was never intended as a tax-free inheritance vehicle for the ultra-wealthy. Comments ranged from '$8 million and they’re whingeing about paying just a little extra tax' to 'Super is not an inheritance vehicle to ensure wealth is passed down the generations whilst paying the least amount of tax.'
It’s a sentiment that resonates with many everyday Australians, especially when you consider that 97 per cent of us will never see a $3 million super balance, let alone $8 million.
But is there more to the story?
While most agree that those with millions in super can afford to pay a bit more, there are some concerns about the details of the new tax. One key issue is that the $3 million threshold isn’t indexed to inflation. That means, over time, more and more Australians could find themselves caught by the tax, even if they’re not what we’d consider 'super rich' today.
Economists estimate that by 2040, $3 million could be worth just $2 million in today’s money. AMP economist Diana Mousina has warned that even average earners could eventually be affected if the threshold isn’t adjusted. She points out that a 22-year-old starting work today and earning average wages for life could eventually hit the $3 million mark.
What does this mean for you?
For now, the vast majority of Australians won’t be affected by the new tax. But it’s a reminder to keep an eye on changes to superannuation rules, especially as governments look for ways to balance the budget and fund essential services.
If you’re lucky enough to have a super balance approaching the $3 million mark (or you’re just curious about how the rules work), it’s worth speaking to a financial adviser. And if you’re like most of us, it’s still a good idea to review your super regularly, make sure your investments are working for you, and check that your fund’s fees aren’t eating away at your hard-earned savings.
The bigger picture: Superannuation and fairness
At its heart, the super tax debate is about fairness. Should those with the most pay a little more to help fund services for everyone? Or is it unfair to change the rules for people who’ve worked hard and saved diligently? There are no easy answers, but it’s a conversation worth having—especially as Australia’s population ages and the cost of healthcare and pensions continues to rise.
Read more: ‘It’s not cause for alarm’: Financial expert leaves advice ahead of superannuation changes
