New tax laws prompt changes in retirement plans nationwide. Here's what we know

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.


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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.
 
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No one is punishing anyone, the tax concessions on Super were to encourage those with little to save for their retirement, not as an investment lurk for those with over $3m to play with, the tax is fair and it's not retrospective, so the time to make changes is now if you're one of the lucky ones.
Lucky I worked my arse off and saved and scrimped so I can donate to the f wits in Canberra
 
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.
Typical Labor stunt. Lie to voters, suck in their votes, then stab everyone in the guts to prove absolute disrespect and hatred for those idiots who believed Labor’s bullshit & got them back into power. Labor never changes. Always the same.
Now those ignorant cretins who voted Labor back in SOLELY to get out of paying their own HECS Debt are bitching that their promised Freebie has not been delivered.
Ha! It may never be delivered you fools! Just bcz AlbaSleazy said he’d wipe out yr debt does not mean he will actually do it!!
Stupid ignorant selfish voters like this deserve everything Labor is going to hurl at everyone - more lies, more gross incompetence, more debt, more financial pain and less security.
 
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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
So you feel it’s fair to double tax? Three million will not buy much when the current generation retires. As it is if you have much less in your super you already miss out on pensions, aged care etc that you paid tax for during your working life. We certainly are very generous to those that have not contributed and lived off the public purse for most of their lives.
 
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??
Its not about bring down tall my poppies , its about fairness to everybody. I'm sick of people saying, I pay my taxes, I have worked hard for my money. Not having much money in super doesn't mean that person hasn't worked hard, people can work hard on low incomes.
 
This punishing tax is yet another blow to the availability of rental properties. Superannuation holders will be motivated to sell investment properties to avoid the tax, but other superannuation holders will not be buying them for the same reason. As the number of investors decrease, the number of purchasers who are owner-occupiers will most likely increase. While some properties may see a slight price reduction, it is unlikely to be large or for any such dip in the market to last long. Such is the nature of the property market.

In the end, this short-sighted action by the government will work against their much-trumpeted goal of “easing” the housing crisis. Investors already pay 15% capital gains tax on the sale of their properties, no matter how much they have paid out over the years to maintain the property and deal with tenants who cause damage. Adding extra tax will only encourage them to sell and invest their money elsewhere, meaning the people struggling to find rentals will have an even more difficult task. Meanwhile, rents will only increase as supply decreases. Good luck finding a nice house or apartment to rent at a price the average worker can afford. Where possible, potential renters may want to consider taking out a 110% mortgage and buying a property to live in as rising rents are close to equalling a mortgage. Shame on Labor for betraying the people who voted for them, trusting that their lives will be better.
 
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 think you've failed to see the bigger picture here. The new rule STARTS at $3M to give you the perception this will only affect the wealthy. Once accepted by all, watch that very rule be implemented to the $2M, then $1M, and so on.
Rise up and resist!!
 
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
Well, we didn't get to find out did we so comparison is therefore absent...
 
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!.
Ditto. Those who voted Labor got exactly what you voted for. Funny thing is, obviously everybody voted Labor expecting a different outcome??!! Cognitive dissonance in action.
 

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