For Australians keeping an eye on the news, many have been paying attention to the changes in some of Australia's services.

Many Aussies have also been abuzz with the government's new super tax changes.

So, what's all the fuss about, and should you be worried?

Starting Tuesday, 1 July, superannuation balances of over $3 million will have a tax increase from 15 per cent to 30 per cent.

However, this is not limited to the money made by selling assets.

The tax would also apply to unrealised capital gains, such as the increase in value of investments despite not being sold.

Aussies with a high superannuation balance may be forced to pay more taxes soon. Image Credit: Freepik

This tax rule was the first of its kind for the superannuation system.

It has also caused quite a stir among Aussies, especially seniors.

Financial advisers have observed a 'tangible sense of unease' among their clients.

As such, some wealthy retirees have already resorted to 'panic selling' their investment properties to avoid the new rules.

For those with a self-managed super fund (SMSF) and a residential property, should the property's value jump from $2.5 million to $3.5 million, they may be taxed for the $500,000 gain above the $3 million threshold.

Unlike shares, which one could sell off in small chunks to cover a tax bill, property is an all-or-nothing asset.

This change could create a real headache for SMSF trustees.

For those who do not have enough cash reserves in their fund, they may be forced to sell the entire property or find other ways to pay the tax.

And with strict rules in place about how residential properties in SMSFs can be used, the taxpayer's options are limited.

What does this mean for the property market?

Ray White's Vanessa Rader warned that these changes could make residential property a much less attractive option for investors.

If people decide to sell up before the new tax kicks in, Australians could see a surge in property listings.

This change could push property prices down for a short period.

If SMSFs start pulling out of the residential property market altogether, there could be fewer rental properties available, which might drive up rent prices.

On the flip side, some argued that the changes were targeted at a small percentage of Australians.

Yet, with property values rising across the country, more people could find themselves bumping up against that threshold soon.

What to do if you're affected by this change

Since unveiling the tax last May, it has sparked fiery debates and discussions online.

Supporters of the tax shared that it could be a fair way for the wealthiest Australians to pay their share.

However, critics argued that taxing unrealised gains could be unfair and may force people to sell assets at the wrong time.

Seniors with a self-managed super fund (SMSF) with property assets may have to sit down with a licensed financial adviser soon.

They could review portfolios, check cash reserves, and weigh in people's options and strategies fitting the new tax laws.

These advisers may also consider other investment options or restructuring holdings to avoid a tax surprise later on.

For those who have not reached the $3 million mark yet, property values could change quickly, and preparation should be the key.

Key Takeaways

• The upcoming superannuation tax change would double the tax rate on super balances above $3 million, including unrealised capital gains.
• For the first time, unrealised gains in self-managed super funds (SMSFs) will be taxed, potentially causing liquidity issues for property owners.
• SMSF trustees may be forced to sell entire residential properties or find other ways to pay the new tax, which could decrease the appeal of holding property.
• Experts warned that these changes might lead to more properties being listed for sale and could shrink the pool of rental properties.

Is this new tax a sensible move to make the system fairer, or is it an overreach that could hurt seniors and retirees? Have you been affected by the changes, or are you considering changing your investment strategy? We'd love to read your thoughts and experiences in the comments below.

 

[Winksie]

I you look into the future, 3 million will not be a big amount and then this tax will affect a lot more Australians, then it will be too late to change. Younger Australians need to think hard as well.

 

[Luckyus]

You voted this shower of shit back in for another three years, he's doing to country what a marine steward did to his mother in spades? Born one still one!.

 

[Franno]

Labor governments rarely think things through and this invariably results in unforeseen consequences. This "tax" (or government theft) will have a devastating impact on the economy and, in particular, the rental market. And if you're young and think you'll escape these consequences, think again. We were warned about another labor government, but clearly didn't listen. We get the government we deserve.

 

[Zorro56]

Sorry, but we are talking $3m plus here. How many ordinary, everyday Australians have that much in their super account. How many people need $3m plus to live a comfortable retirement? Only those that were living an extravagent life before retirement, and those that are using the Super system to dodge tax. Keep in mind, your super is still earning you plenty if you have invested it wisely. What is all the fuss about?

 

[Kahlan28]

Sorry, but we are talking $3m plus here. How many ordinary, everyday Australians have that much in their super account. How many people need $3m plus to live a comfortable retirement? Only those that were living an extravagent life before retirement, and those that are using the Super system to dodge tax. Keep in mind, your super is still earning you plenty if you have invested it wisely. What is all the fuss about?

I agree entirely, it's just a bit hard to feel sorry for people who have 3 million in their super funds

 

[consult]

For those criticising our current Government - would you rather be Governed by the dishonest, disorganised, policy lacking chaos that is the current LNP?
The new tax will effect around 80 thousand Australians currently and if is more in the future the threshold can be raised. I am Self funded retiree with a part pension and consider a 3 million + fund far more than an adequate retirement. Anyone who has acquired that much wealth - and good luck to you if you have- could contribute by paying tax on the amount over 3 million.
I think the Labor government are doing a great job. We are souch better under them than the self confessed Trumpian style LNP

 

[Luckyus]

A million dollars would give me fifty grand a year for twenty years? I'm not planning on getting a telegram from Charlie boy or young Willie, whichever comes first.

 

[Trina G]

For those criticising our current Government - would you rather be Governed by the dishonest, disorganised, policy lacking chaos that is the current LNP?
The new tax will effect around 80 thousand Australians currently and if is more in the future the threshold can be raised. I am Self funded retiree with a part pension and consider a 3 million + fund far more than an adequate retirement. Anyone who has acquired that much wealth - and good luck to you if you have- could contribute by paying tax on the amount over 3 million.
I think the Labor government are doing a great job. We are souch better under them than the self confessed Trumpian style LNP

Totally agree! Why are rich people always trying to avoid paying tax. The majority of the population pay their taxes, have a grumble and then get on with life. The rich never stop grumbling and constantly look for ways to avoid it. Over $3m in super, if only!

 

[Wattoval]

This is not a fair tax, especially to those who have worked hard all their lives, have bought properties along the way so that when they retire they can sell and won’t live off the taxpayers.
Not everyone is a cheat and liar, so why should they all be put in the one basket.
If many, who have taken responsibility for their retirement, not enjoy the fruits of their labours.

Seeing that those who make these decisions, Politicians in general, whom have their own superannuations set up completely different to us normal people, will they also be taxed on their money and all their other investment houses, I bet NOT.

We all know that the very wealthy employ accountants and in doing so, what is on paper is very different to what they hide.

As per normal, Australia is one of the worst Countries for taxing absolutely everything and now they are hitting those who wish to just have a happy and comfortable retirement.

 

[beauravn]

"Ray White's Vanessa Rader warned that these changes could make residential property a much less attractive option for investors. If people decide to sell up before the new tax kicks in, Australians could see a surge in property listings. This change could push property prices down for a short period."

From my perspective, this is nothing but GOOD news as it might go a good way into bringing down property values and easing the housing crisis. But then, I don't have 'investment properties'. However, I DO have compassion for people with far less means to be able to either affordably rent or buy a home to live in. Shouldn't this aim be everybody's primary concern when it comes to owning property?

 

[Karen3g]

It’s a much-needed and sensible change to arrangements that will effect only a tiny number of superannuants — those with an asset base of more than $3m — but it will help fund services for the rest of us who cannot aspire to such lofty levels of wealth.

Time for the Government to deal with the Howard time-bomb of franked dividends and the off-shoring of profits by big corporations.

 

[Leenie]

A million dollars would give me fifty grand a year for twenty years? I'm not planning on getting a telegram from Charlie boy or young Willie, whichever comes first.

I would be happy with that amount.

 

[Greg350]

I you look into the future, 3 million will not be a big amount and then this tax will affect a lot more Australians, then it will be too late to change. Younger Australians need to think hard as well.

The rich use super to avoid paying their share of tax. Clearly you must be one of them. Pay your way, super is not there to make the rich richer, they can invest in other places and pay their share of tax.

 

[Greg350]

A million dollars would give me fifty grand a year for twenty years? I'm not planning on getting a telegram from Charlie boy or young Willie, whichever comes first.

And that's without the pension, ample money for most people.

 

[RealityCheck]

If someone's $3M+ SMSF is all property & too little cash, that's their mistake. They need an incentive to properly diversify their mix of assets.

And the logic equating selling an investment property as reducing the rental pool is an epic fail. The property doesn't vanish. Either another investor purchases said property, so no nett change, or if prices do drop a previously renting person/couple/family purchase it reducing the rental market by 1 but also reducing the renter population by 1! No nett change!

 

[Mika in the van]

I you look into the future, 3 million will not be a big amount and then this tax will affect a lot more Australians, then it will be too late to change. Younger Australians need to think hard as well.

There will be many more governments in power before our young people reach retirement. The tax could be removed, increased, the threshold changed by then.

 

[Mika in the van]

If I only I had $3 million to worry about taxes.

 

[Onslo]

If it was indexed to CPI I wouldn't have a problem with it. The problem is that it is not. If its not indexed at the beginning it never will be. Sure, it might only affect a small percentage of retirees now consider what $1m would have got you in 2000. It will be disastrous for future generations. It will also have a major impact on farmers and small business owners who seriously may have to sell off assets to pay the tax. Simply a DEATH DUTY by another name. As for the tax on unrealised capital gain with no adjustment for when the value of an asset goes down, this will finally be the downfall of this reckless, big spending woke Government to its knees.

 

[Lynnyrose]

This is not a fair tax, especially to those who have worked hard all their lives, have bought properties along the way so that when they retire they can sell and won’t live off the taxpayers.
Not everyone is a cheat and liar, so why should they all be put in the one basket.
If many, who have taken responsibility for their retirement, not enjoy the fruits of their labours.

Seeing that those who make these decisions, Politicians in general, whom have their own superannuations set up completely different to us normal people, will they also be taxed on their money and all their other investment houses, I bet NOT.

We all know that the very wealthy employ accountants and in doing so, what is on paper is very different to what they hide.

As per normal, Australia is one of the worst Countries for taxing absolutely everything and now they are hitting those who wish to just have a happy and comfortable retirement.

I totally agree What is it with Australians & the tall poppy syndrome. If it wasn't for the people who have worked hard all their lives & don't depend on the tax payer to look after them & often have a business & employ people, you maybe without a job! And then they are punished for their hard work & trying to get ahead & support themselves comfortably. And you are right! The politicians don't pay this tax until they retire. Now is that fair??