Labor’s unrealised gains tax on superannuation could be passed in the Senate after its election win

Labor’s plan to raise tax on large super accounts could finally be pushed through parliament after Labor’s landslide win, despite claims it is a “really bad” idea.

A controversial proposal to jack up tax on large superannuation accounts could finally be pushed through parliament after Labor’s landslide win, despite a top economist warning the proposal is “really bad” and is poised to swallow up more and more Australians.

Labor’s unrealised gains tax on superannuation – which is set to be reintroduced to the Senate after their crushing victory – could also have its threshold dropped under pressure from the Greens, capturing more superannuation accounts.

The new tax would result in profits on superannuation balances above $3 million having their tax doubled to about 30 cent per cent, with that including capital gains made on assets in the account such as shares and property, even if they weren’t sold – an ‘unrealised gain’.

The government believes the move would help raise more than $2.3b a year in revenue, but top economist Dr Luke Hartigan slammed the proposal in its current form.

Prime Minister Anthony Albanese arrives at Willie the Boat Man brewery, St Peters, on Sunday to celebrate his victory. Picture: Justin Lloyd.

“The fact that it’s not indexed, that’s really bad … a large portion of people in 10-20 years are likely to have balances that are affected,” Dr Hartigan, a lecturer at the University of Sydney’s school of economics, said.

“It’s exactly like bracket creep – we’re finding now people who are on low incomes and get wage rises get forced into another bracket … over time as super balances grow … it’s going to affect more people.”

Dr Hartigan said the Coalition should have attacked the issue more during the election.

“It should be debated whether it’s a fair thing to do … I don’t think people are probably aware of this,” he said.

The Coalition tried to ramp up fears over the incoming tax during the election, but ultimately failed to land a blow on it.

“Unrealised capital gains tax … that is an inheritance tax, it is a death tax by stealth,” former Opposition leader Peter Dutton said last week.

Peter Dutton where he conceded defeat to Anthony Albanese. Picture: Adam Head / NewsWire

Labor has maintained the measure will impact just 0.05 per cent of the population, saying that 99.5 per cent of Australians have super balances under $3 million.

It comes as the Greens, coming off a bruising election result in which they’ll lose at least two MPs in the lower house, will attempt to throw their weight around in the Senate – with the party previously pushing to drop the threshold to $2m from $3m.

Greens Senator David Shoebridge, while not commenting specifically on unrealised capital gains tax, told this masthead his party would try to use their numbers on the Senate crossbench to force through their reforms.

“There is now no barrier to genuinely, essential progressive reforms, with the Greens holding the sole balance of power in the Senate – the question is will there be the same zero ambition in the last parliament, or will the country grab this chance for genuine reform,” he said.

“With the Greens having the sole balance of power in the Senate, the next 18 months are the perfect opportunity to address some of the really essential structural reforms needed to make the country fairer and more sustainable.”

Originally published as Labor’s unrealised gains tax on superannuation could be passed in the Senate after its election win