Jim Chalmers has announced significant changes to Labor’s proposed superannuation tax reforms, resulting in a policy that raises less revenue but aims to create a fairer system. The revised plan, which targets balances above $3 million, will now tax earnings at 30% for balances between $3 million and $10 million, and 40% for those above $10 million. However, the changes mean the policy will collect an estimated $2 billion in 2028-29, down from $2.7 billion under the original proposal.
The key modifications include taxing only realised gains rather than unrealised ones, addressing concerns that the original bill would have forced cash-poor asset owners to sell property to pay taxes. The threshold will also be indexed to inflation annually, preventing it from capturing more people over time. These adjustments come after criticism that the original plan was too complex and potentially unfair to farmers and other asset-rich individuals.
Despite the watering down, the treasurer argued that the policy still represents progress, with 14 times more people benefiting from an increase in the low income super tax offset than those affected by the higher tax on large balances. The offset will rise from mid-2027, providing a boost to millions of low-income Australians.
Critics, including the Grattan Institute’s Brendan Coates, expressed disappointment, saying the changes reduce confidence in broader super tax reform. The bill will now undergo another year of consultation before being introduced from mid-2026, a year later than originally planned.
