Chalmers puts super-sized retirement deposits in the firing line

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A jump of more than 60 per cent in the handful of people with retirement nest eggs of over $100 million will be used by Treasurer Jim Chalmers to demand the Coalition backs his plans to increase tax on large superannuation balances.

Under pressure over the cost-of-living burden facing ordinary Australians, Chalmers used the release of draft laws covering the government’s tax plan to accuse opponents of siding with wealthy individuals using the superannuation system to manage their tax affairs.

Treasurer Jim Chalmers will release his draft superannuation tax changes on Tuesday.Credit: Alex Ellinghausen

The government has faced criticism from elements of the superannuation industry, parts of the Coalition and some crossbenchers over its plan to increase the tax on super accounts holding more than $3 million from 15 to 30 per cent.

It estimated the plan, which will not start until after the next federal election in 2025, would affect only 80,000 people while raising $2 billion in its first full year of operation.

Chalmers said all Australians would continue to receive superannuation tax breaks under the proposal, but they would be “slightly” less generous for people with large retirement savings.

“The Coalition should either support this modest and sensible change or nominate where else they will find billions of dollars in budget improvements,” he said.

Chalmers accused the Coalition of prioritising tax breaks for the rich.

“Labor’s highest priority is targeted cost-of-living relief in a more responsible budget,” he said. “Australians are making hard choices around the kitchen table, and it’s important that the government does the same thing around the cabinet table.”

According to new Tax Office data, the number of Australians with superannuation balances of more than $100 million increased from 17 in 2019-20 to 28 in 2020-21.

The ATO says people with balances above $50 million increased from 78 to 107 over the same period, and the average super balance increased by $20,000 from $150,000 in 2019-20 to $170,000 in 2020-21.

All people with super funds pay a concessional rate of 15 per cent on the earnings in their funds.

When first announcing the plan in February, Prime Minister Anthony Albanese said 99.5 per cent of Australians would be unaffected.

“We’re proposing a change that will have an impact on half a per cent of the population. If you knew that there were 17 people who had $100 million in their account, I didn’t. And it’s hard to argue that those levels [are] about actual retirement incomes, which is what superannuation is for,” he said at the time.

Opposition Leader Peter Dutton has refused to support what the Coalition is labelling a broken election promise after Albanese previously said he had no intention of making any super changes.

“We’re absolutely dead against it, and we will repeal it,” Dutton said earlier this year.

“The figure of $3 million is not indexed so in 10 or 15 years’ time there will be tens of thousands, if not hundreds of thousands of Australians who will be affected by this.”

Chalmers has said he does not want the $3 million to be indexed to inflation, leaving that decision to future parliaments.

Members of the Senate crossbench, crucial to passing any legislation, have signalled their openness to the changes, with Greens leader Adam Bandt previously arguing the tax increase could have gone further.

Independent senator David Pocock has also raised the idea of extending the change to super funds with more than $2 million – an approach backed by the Grattan Institute – to raise more revenue.

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