Political battle looms on super tax

The Coalition is laying the foundations for a political fight with Labor over potential changes to tax concessions in the $3.3 trillion superannuation system.

Opposition assistant Treasury spokesman Stuart Robert. Picture: NCA NewsWire / Gary Ramage

The Coalition is laying the foundations for a political fight with Labor over potential changes to tax concessions in the $3.3 trillion superannuation system after the government signalled it would examine the cost-­effectiveness of key tax breaks.

Assistant Treasurer and ­Financial Services Minister Stephen Jones said on Tuesday the concessional taxation of self-managed super funds with more than $10m in assets should be on the table for discussion.

“We have 32 self-managed super funds with more than $100m in assets,” he said.

“The largest self-managed super fund has over $400m in assets. The concessional taxation of funds like these has a real cost to the budget which needs to considered.

“Mercer estimates that the tax concessions on a single $10m self-managed super fund could support 3.1 full Age Pensions.”

Opposition assistant Treasury spokesman Stuart Robert said there were “lots of kites being flown” and Labor had no mandate to crack down on superannuation tax concessions.

“Labor made it very clear there’d be no new taxes, no changes to super,” he said. “It’s a massive broken promise.”

Mr Robert said any changes should be taken by the government to the next election.

Opposition finance spokeswoman Jane Hume said Labor had made “multiple public commitments to no new taxes on super”.

“Stephen Jones ... appears to have backflipped on this commitment just six months after the election. Any change to superannuation caps or thresholds would be yet another broken promise,” she said.

AustralianSuper boss Paul Schroder on Tuesday said there might be a case for reducing tax breaks for super members with higher balances, as he detailed that a member with a balance of $5m would earn $325,000 tax-free each year.

“It’s a matter for government really, and I think they’re going to have to make judgments and trade-offs … But I do think it’s completely reasonable (to have the discussion on cutting super tax breaks),” he said.

“We’ve got plenty of multimillion-dollar members in the fund. To each of them, I’m going to apologise for what I’m about to say but readjusting the tax mix would be beneficial for society and would probably still allow someone to earn $325,000 a year tax-free without touching capital.”

SMSF Association chief executive John Maroney said he was “comfortable with the conversation” about addressing tax concessions on large accounts.

“We agree it needs to be looked at. But it’s starting with what is the objective of super. That’s the issue that needs to be looked at first,” he said.

“That defines what it is you are trying to achieve.”

Financial Services Council chief executive Blake Briggs said Australians had “every right to expect the tax rules will not be changed without proper debate and consultation”.

“The government has agreed with the FSC to first legislate a clear and commonly shared ­objective for superannuation, which will avoid ‘putting the cart before the horse’ and reduce the risk that any tax changes undermine consumer confidence in superannuation,” he said.

“This debate should not only be about higher taxes … the FSC urges the government to also consider making superannuation fairer by committing to paying superannuation contributions on government paid parental leave and bringing gig workers into the system.”

Industry Super Australia chief executive Bernie Dean said a “precondition for any debate about improving the equity and targeting of tax concessions is a legislated objective of super”.