Treasurer Jim Chalmers labelled ‘smug’ for resisting push to change super tax

Treasurer Jim Chalmers has been lashed for Labor’s refusal to deviate from the plan to increase the tax on Australians with $3 million or more in their super.

Labor is being urged to ditch plans to hit huge super accounts with a tax on unrealised profits from property or shares in favour of hiking the rate on regular earnings, which would have broader support in the parliament.

Treasurer Jim Chalmers has been lashed by Nationals leader David Littleproud as “smug” for Labor’s refusal to deviate from the plan to increase the tax on Australians with $3 million or more in their super and applying it to income that hasn’t yet been received.

Treasurer Jim Chalmers has been labelled ‘smug’ by the Coalition. Picture: NewsWire / Martin Ollman

The Coalition has signalled a deal on the controversial bill would be possible if this unrealised gains component was scrapped, a position long-held by Senate crossbenchers who helped hold up the legislation last term.

Under Labor’s proposal the concessional tax rate on super earnings would be lifted from 15 per cent to 30 per cent for Australians with balances of $3m or more, with the rate also to be applied to the increased value of land and other non-cash assets in their portfolio.

This means people would get a tax bill reflective of that so-called “paper profit” even though they haven’t actually sold the asset and “realised” the gain.

Nationals leader David Littleproud says he is concerned about farmers who own their property in their super account. Picture: NewsWire / Martin Ollman

Mr Littleproud has raised concerns about the impact this would have on farmers who own their land through their super, warning in times of low cash flow such a tax bill would “send them to the walls” financially.

“This is where Jim Chalmers needs to admit he’s got it wrong,” Mr Littleproud said.

“Stop being so smug and arrogant and say you got it wrong.”

Currently Labor only needs the Greens support to pass the bill through the Senate, but both Coalition treasury spokesman Ted O’Brien and several crossbenchers have indicated there is a pathway for a broader deal if the proposal was changed.

ACT Senator David Pocock says a tax on unrealised gains is not the best way to ensure the super tax concession system is working fairly. Picture: NewsWire / Martin Ollman

ACT Senator David Pocock has argued he can’t back a model where people are taxed on income they haven’t actually received.

“We absolutely should be having a sensible conversation about how to use super tax concessions more wisely … but taxing unrealised gains isn’t the way to do it,” he said.

Tasmanian Senator Jacqui Lambie said despite the crossbench no longer having balance of power in the Senate she thought the super bill debate was going to be a “fight from hell”.

Senator Jacqui Lambie says she expects the super tax will be a ‘fight’ in the Senate. Picture: Nikki Davis-Jones

Ms Lambie is also concerned about the impact on farmers, as well as demands from some retired judges for their lucrative judicial pensions to be exempted.

“There should be no exemptions,” she said.

Assistant Minister Matt Thistlethwaite defended Labor’s policy, insisting “everyone would be treated the same” in terms of the amount they were asked to pay.

Pushed about veteran politicians on the old defined benefits pension scheme, like Anthony Albanese, being able to defer tax payments, Mr Thistlethwaite said policy was designed to make Australians “pay their fair share of tax”.

“At the moment, some people can divert money from income to avoid paying income taxation into superannuation to get a concessional rate,” he said.

About 80,000 people have $3m or more in their super, but as the tax threshold is not indexed more people would be captured over time.