Super raid is taxing for rich
AUSTRALIANS with more than $3m in their superannuation accounts will have their concessional tax rate doubled.
A week after Treasurer Jim Chalmers announced a major rethink of the future of the superannuation system, he said the change – which would affect less than 0.5 per cent of all Australians – would save the budget $2bn.
The change to concessional tax rates – from 15 per cent to 30 per cent – won’t come into effect until 2025-26, after the next election, and will affect about 80,000 people.
The other 99.5 per cent of Australians will continue to receive the “same generous tax breaks” as before, he said.
The “modest adjustment” is not retrospective, and will not impose a limit on the size of superannuation account balances in the accumulation phase.
Prime Minister Anthony Albanese said it was an “important reform” that did not change the fundamentals of the superannuation system.
“With 17 people having over $100m in their superannuation accounts, one individual with over $400m in his or her account, most Australians would agree that this is not what superannuation is for. It’s for people’s retirement incomes,” Mr Albanese said.
“Confronted with this information, it would be irresponsible to not take any action whatsoever. This reform will strengthen the system by making it more sustainable.”
The average superannuation balance is about $150,000. And of the 80,000 people with more than $3m in their accounts, the average is about $6m.
Earlier on Tuesday, the 2022-23 tax expenditures and insights statement was released, which showed the revenue forgone from superannuation tax concessions amounted to about $50bn a year, and is on track to cost more than the age pension by 2050.
The statement also estimated that of the 10 biggest tax expenditures, worth more than $150bn annually, about a third is made up of tax discounts.
“The majority of these super tax breaks go to high income earners,” Dr Chalmers said in a statement.
“For instance, over 55 per cent of the benefit of superannuation tax breaks on earnings flow to the top 20 per cent of income earners, with 39 per cent going to the top 10 per cent of income earners.”
The Treasury statement, however, said that assessment is unsurprising. “There are fewer recipients in lower income brackets because government payments, for which compulsory superannuation contributions are not required, are the main source of income for a large proportion of individuals in these deciles,” the statement read.