How Labor’s shock super tax changes will impact the average Aussie

Surprise tax changes hitting superannuation will not impact most Australians, but the government has left the door open to going after more tax breaks.

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Surprise tax changes hitting superannuation will not impact most Australians, but the government has left the door open to going after more tax breaks like capital gains tax and negative gearing.

In 2016 and 2019 Labor pledged to restrict negative gearing to new homes only and to halve the capital gains tax deduction for property investors, before dumping the policies ahead of last year’s election.

Treasurer Jim Chalmers and Prime Minister Anthony Albanese did not rule out targeting these tax breaks again, as they faced questioning on Tuesday afternoon about its surprise tax hike on superannuation.

Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

The super changes announced on Tuesday will impact just 80,000 people in the first year, but this number will grow over time.

It will mean that people with more than $3 million in their superannuation account will have their earnings on superannuation above that $3 million threshold taxed at 30 per cent instead of 15 per cent.

It will raise about $2 billion a year for the budget and more than 99 per cent of Australians will not be impacted by this.

The changes will not take place until after July 1, 2025, after the next election.

But the Treasurer also released a tax statement on Tuesday, which pointed to $150 billion in various tax breaks from which the government foregoes revenue.

As well as $50 billion in superannuation tax breaks, there was about $23 billion in discounts on capital gains tax and $3.6 billion in negative gearing.

There are about 1.3 million Australians who are able to get tax breaks from negative gearing, where losses are made on a rental property, and 610,000 who get the 50 per cent discount on capital gains.

The capital gains tax discount means when an investor sells a property they have owned for more than 12 months, half of the money they made on the sale is added to their taxable income for that year.

If capital gains discounts were halved, as previously put forward, it would see a person pay tens of thousands of dollars more in a single tax year.

Mr Chalmers did little to shoot down speculation it could seek changes to tax concessions on capital gains tax, saying superannuation concessions were the priority.

“The tax expenditure statement is not a statement of government policies or even policy intent, it shouldn’t be read that way,” he said.

“We don’t see (capital gains tax) as unfinished business.

“The cost of these (superannuation) tax breaks is overwhelmingly skewed towards a small number of people with high balances, with balances well beyond what is required for a comfortable and a dignified retirement.”

Treasurer Jim Chalmers and Prime Minister Anthony Albanese held a press conference at Parliament House in Canberra on Tuesday. Picture: NCA NewsWire / Martin Ollman

Mr Albanese said there would be no changes to superannuation during this term of government.

“What we are doing is pointing towards 2025. Now, we can’t be clearer, not just in our words, but in our actions,” he said.

Shadow treasurer Angus Taylor said Labor had broken an unambiguous promise not to touch superannuation, on the same day it released a report outlined “more than $150 billion of additional taxes that they may well choose to impose on the Australian people”.

“They refused to rule out imposing capital gains tax on Australians’ homes. They refuse to rule out getting rid of negative gearing. And we know they’re coming after franking credits,” he said.

“This is the Labor Party that says one thing before an election and does something very different afterwards.

“They’re not talking about managing their spending, they’re talking about raising taxes.”

Opposition assistant treasury spokesman Stuart Robert accused the government of “lying” to voters before the last election.

“This was the plan. A plan for more tax, not a plan for addressing cost of living,” he said.